Jobs needed, but from where?

Northern NIgeria. PHOTO: ABC News

The unemployment problem should not be news to Nigerians. Unless you have not been paying attention, you probably know that the rate of unemployment has been going up over the past few years. The unemployment rate has risen from 6.4 per cent as at the end of 2014 to 18.8 per cent as at September 2017, the last time it was measured. Of those who are actually working, over 21 percent are underemployed, meaning they are working but they are really just “doing something”. If you combine both the unemployed and the underemployed then the numbers should give everyone sleepless nights.

Some might argue that the unemployment problem is really only because of the recent recession but a closer look at the numbers show that the trend has been there since at least 2010. To be clear, the recession, and the policy actions in response to it, made a bad situation worse. Faced with a struggling economy, the current admin decided to implement its own version of special ‘economics’ which unsurprisingly failed. But I digress. The unemployment problem has been bubbling under since before Buhari, or Goodluck sat on the hot seat.

A closer look at the numbers shed some light on why. Unemployment is rising not because the economy isn’t creating jobs. On average the Nigerian economy creates lots of net jobs every year, that is jobs created minus jobs lost. The problem however is that the number of people entering the labour force is always higher. So, even if one million net jobs are created in a year, if two million people enter the labour market then unemployment continues to rise. We are simply not creating enough jobs.

The obvious question is why we are not creating enough jobs? The answer can be summed up using this simple analogy. Imagine you have a trailer loaded with cement which breaks down and needs to be towed. But the towing company arrives in a Keke Napep. You don’t need to be a rocket scientist to figure out that a keke napep cannot tow a trailer. It can try and may even succeed in moving it a few inches but ultimately, it’s an exercise doomed to failure. In this example, Nigeria is the trailer and the Nigerian economy is the keke napep. Our claim to fame is that we have a large population, of 190 million people and counting so far. We are many and account for about 2.6 per cent of the global population. Our economy though, is less that 0.5 percent of the global economy. Our population is big, but our economy is not big enough. A large fraction of that 190 million people are desperately poor.

Our unemployment problem then arises from the reality that we have been implementing policies that assume that our economy is big enough when it isn’t. For the past two decades our economic strategy has been to use trade policies, tariffs and bans on imported products, to force the Nigerian economy to depend on itself. The tacit assumption with these policies is that there is enough internal demand to generate the kind of economic activity that is required to move the needle. The current admin doubled down on that strategy with its brand of self-sufficiency philosophy and juche economics. The results are obvious. The import-substitution self-sufficiency policy will always create some jobs. There will always be the businesses who benefit from such policies, and who will serve as advertisements for the government to say, “our policies are working”. The jobs they create will however not be enough. They cannot be. Just like a Keke Napep cannot tow a trailer. The only outcome will be ever-rising unemployment.

The recent release of the unemployment data is likely to lead to deliberations in government on how to tackle the problem. Those deliberations are likely to result in the creation of another job creation initiative focusing on youth and skills development and if we are unlucky, another cash bonanza where government will indirectly employ people. However, I hope that they get the time to deliberate on this simple fact: The Nigerian economy cannot internally create enough jobs for the Nigerian people. Dealing with the unemployment problem requires a change in strategy, from looking inwards to looking outwards. The real question then becomes, what can Nigeria do for the world economy, and how do we get people here to tap into that.

Nonso Obikili is an economist currently roaming somewhere between Nigeria and South Africa. The opinions expressed in this article are the author’s and do not reflect the views of his employers.

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