Thursday, August 11, 2011

Winning the unemployment war in Nigeria

The singsong in Nigeria now is the alarming rate of unemployment. The Governor of the Central Bank of Nigeria, Mr. Lamido Sanusi on July 16, 2011 said youth unemployment rate in Nigeria has hit 41.6 per cent. According to him, in gender-specific terms; the rate is 23.3 per cent for males and 17 per cent for females within the age of 15 and 24 years. The CBN Governor made the assertion in a paper, titled, “Youth empowerment as a tool for sustainable development -The Central Bank of Nigeria interventions,’ which he delivered at the National Youth Service Corps orientation Camp in Kwara State.

While speaking at 100th International Labour Conference (ILC) in Geneva, Switzerland in June 2011, former President Olusegun Obasanjo said “I want to underline the situation that will signal red alert for us in Africa. I am worried, I am apprehensive about unemployment in our continent that it has not been taken as seriously as it should be. I give example of my own country, Nigeria where we have about 120 tertiary institutions. When I was growing up, there was only one university in Nigeria. Today, when you include the polytechnics to the tertiary institutions, we have over 200 institutions of learning. Each institution graduates about 3,000 students every year. You have well over 600,000 graduates every year but we are not creating 100,000 jobs every year. That is the issue that worries me....”

According to the Punch editorial of July 26, 2011: “Some of the factors militating against effective reduction in unemployment include what the World Bank’s World Development Report for 2007 identified as slow economic growth and rigid labour markets; lack of skills and experience as well as limited access to information. Other factors include the collapse of the nation’s industrial sector due to harsh operating environment. For instance, the Manufacturers Association of Nigeria disclosed that in 2009, 834 member companies closed. The association’s membership audit revealed that no part of the country escaped company closures while up to half of those companies still in operation are “ailing.” The latest closures, according to the body, resulted in the loss of 83,000 jobs. Textile firms, which in the mid-1980s employed about 350,000 persons directly in over 200 mills, now employ less than 20,000 persons, following the collapse of most of the firms. Epileptic power supply has also spawned other economic distortions, including excessively high domestic production costs and low industrial capacity utilisation.” Aside the aforementioned reasons, a former Minister of Education in 2009 said eighty per cent of Nigerian graduates are unemployable. His reasons were because these graduates are poorly taught due to inadequate infrastructure and poor library facilities. How about that?

Quite alright, over the years, government has taken steps to address and redress the soaring rate of unemployment in Nigeria; however, such remedial measures have not yielded appreciable success. Among earlier initiatives are the establishment of National Directorate of Employment and National Poverty Eradication Program. In the 2011 budget, the Federal Government earmarked N50 billion for creation of jobs for the country’s teeming unemployed youths through the establishment of the National Job Creation Scheme (NJCS). While presenting the budget to the National Assembly on December 15, 2010, President Goodluck Jonathan said “to immediately impact unemployment, a Public Works Programme will commence across the 36 states and the Federal Capital Territory. This programme will involve the engagement of private sector contractors to implement simple, labour intensive public works...” The budget has been passed and signed since May 27, 2011, the cabinet has been reconstituted after the elections and hitherto, less than five months to the end of the year, nothing has been heard about when, how and if this N50 billion will or has been put to use.

In order to effectively overcome the grave challenge posed by unemployment in Nigeria, sober attention must be paid to sectors of the economy that are known to create value. As the process of preparing 2012 budget commences, it is important for government at all levels to do everything humanly possible to widen the productive base of the economy. These are the agricultural sector, mining and manufacturing sector, as well as the Information, Communication Technology sector. Nigeria’s over-dependence on oil and gas has been counter-productive. It is reported that the nation’s oil and gas sector, which today contributes over 90 per cent of export earnings and provides about 85 per cent government revenues, only contributes about four per cent to the nation’s employment.

It is heart-warming to note that the Federal Government has promised to release N75 billion to Small and Medium Enterprises (SMEs) under a low-interest credit scheme to, among other things, strengthen their capacity for job creation. The recently launched Nigeria’s Incentive-based Risk Sharing System for Agricultural Lending (NIRSAL) packaged by the Central Bank of Nigeria is also laudable. NIRSAL, which has been estimated to gulp about N77.5 billion for its implementation, is an innovative mechanism aimed at de-risking agriculture in order to motivate banks to unlock the enormous financial resources for the sector through increased lending. Hitherto, despite the 45 per cent contribution of the agricultural sector to the Gross Domestic Product, it was getting a meagre four per cent of the Federal Government’s total annual budgets since 2006.

In summary, as the various governments settle down to govern after the elections and inaugurations, it is of utmost importance for them to treat the issue of unemployment with the urgent attention it deserves. Rhetoric, lip-service and deception would cause collateral damage sooner than later. It is therefore imperative for the different tiers of government to provide the enabling environment that will encourage private sector to invest in the productive sectors such as agriculture, ICT and industrial concerns. The favourable environment being craved for comprises provision of basic infrastructures such as good roads, railway, electricity, pipe borne water, hospitals, schools, etcetera. One way of achieving that is by reducing the recurrent expenditure with a view to increasing the capital vote. Other needful interventions include provision of adequate security for lives and property, observance of rule of law, policy consistency, tax friendly regimes and efficient anti-corruption measures. We also need to take a cue from many Asian nations that give primacy to training and skills development, thus creating a pool of dexterous and technology-compliant youths with globally marketable skills.