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Where are the Jobs?
By Nasir el Rufai
09 Sep 2011
Nasir El-rufai. Email: nasir.elrufai@thisdaylive.com
Today, Nigeria has about 90 million people who are willing and
able to work, but about 70 million of them have no gainful
employment. This is an alarming figure, but when the 4.7 million
people captured in the formal sector in the latest statistics
from the Pensions Commission is increased by the three to four
times standard multiplier to capture those in the informal
sector, it means that only about 20 million Nigerians have jobs,
out of a population of 162 million.
This simple fact causes the country a loss of about N2 trillion
annually from the absence of commercial activities that
ordinarily should have taken place but did not.
So every day, millions of our unemployed brothers and sisters –
including those entering the workforce for the first time and
others who lost their jobs due to the incompetent management of
our economy anxiously - scan the pages of newspapers and
websites for job advertisements; less than 10 per cent of
applicants will be successful, but at least three million more
unemployed people will join them next year.
Why are unemployment and inflation rates rising while
productivity continues to decline? Why have our vast resources
not created massive employment opportunities for Nigerians? The
most despairing aspect is the fact that the worst affected are
Nigerians between the ages of 21 and 40 years - the future
leaders of our country.
In 1963, our population was about 56 million, a large percentage
of which was employed. The employment to population ratio grew
until the early 1980s when it started to decline. Officially,
the unemployment rate is 19.7 per cent. This means that at least
18 million Nigerians have no jobs and cannot meet their
responsibilities.
The effects of unemployment on the person and the country can be
catastrophic. At current rates, even if government policies,
enabling environment and direct efforts manage to create one
million new jobs a year, it would take 18 years to close the
existing job gap. Except that by that time, at least 54 million
more Nigerians would have joined the workforce.
As at 1996, 2.8 million job seekers entered the Nigerian labour
market annually, but only about 10 per cent of them found
employment. Perhaps, today’s figures are too scary for
government to release, but unemployment is too critical for
government to play political ostrich with. The average years of
studies and Return on Investment (ROI) for a university degree
in Nigeria are both five years, yet it takes an average Nigerian
graduate an average of another five years to find what can be
considered a stable job
Many others, especially those without “godfathers” remain for
longer periods without jobs no matter how qualified they may be.
Not only are large numbers of Nigerian graduates unemployed or
underemployed; many are unable to apply the skills learnt in
school. There are also large segments of the employed population
who are simply wasting away, doing things they really have no
business doing – just to remain alive.
Another worrying issue is our national productivity output gap.
Unemployment causes substantial economic losses. We should be
producing goods and services for at least another 70 million
people, but because unemployed people do not earn money, that
gap remains unfilled. And there seems to be no hope in the
immediate future. All government’s promises of “creating jobs”
have remained unfulfilled. Anyone familiar with data on
unemployment will know that all the supposed falls in the
unemployment rate are statistical manipulations because they do
not reflect any actual job gains.
The jobless rates in Nigeria have not fallen. On the same day
but at different functions, the Minister of Trade and Investment
put the unemployment rate at 14-16 per cent, while the Finance
Minister put it at 21 per cent. The actual figure may be much
higher than both numbers.
The millions of people with no jobs represent a serious
impediment to Nigeria’s economic development. Apart from the
immense waste of the country's human resources, it generates
losses in terms of lower output which results in poorer incomes
and increased poverty. It also causes social decay and inhibits
national cohesion. In fact, unemployment in Nigeria is a
national security threat. So what should government do to create
jobs?
In virtually every economy, it is small businesses and
entrepreneurial ventures that account for nearly 70 per cent of
new jobs, not the government and not the large companies. It is
therefore sensible to remove the obstacles to doing business and
sustaining small and medium enterprises. These obstacles include
infrastructure constraints, especially electricity, a
dysfunctional and corrupt public service that frustrates
businessmen, and lack of affordable, long term finance for any
venture other than trading! Nigeria was ranked 108 out of 175
countries in the IFC Ease of Doing Business Index in 2007, ahead
of Brazil, Morocco, Senegal, Egypt, Cameroon and the Gambia.
By 2010, under the Umaru Musa Yar'Adua administration, our rank
fell sharply to 134 and all these countries have overtaken us.
This year under President Goodluck Jonathan, we have dropped
three places. Nigeria now ranks 137 out of 183 countries. It is
easier to do business in the West Bank and Gaza than Nigeria. So
how can new jobs be generated?
Nigeria's rank in the World Economic Forum (WEF) Global
Competitiveness Index has similarly dropped from 95 out of 131
countries in 2007, to the bottom 15. We are now ranked 127 out
of 142 countries, while South Africa moved up four places in the
same period, and is now in the top 50. In terms of
competitiveness within our sub-region, in 2007, Senegal, Kenya,
Benin, the Gambia and Cameroon were worse off than Nigeria. Now
they are ranked well ahead of us.
The WEF's observation about Nigeria’s dismal position has
Jonathan's work cut out for him. We need to improve protection
of property rights, fight corruption, attack undue influence and
government inefficiencies. Nigeria was ranked 128th out of 142
countries in terms of security, 135th in terms of infrastructure
and 140th in health and primary education quality. And this was
all well before our worsening insecurity and terrorist attacks!
Who will invest in job creation amidst increasing insecurity?
One of the much-touted actions of government of recent was the
provision of N50 billion in the 2011 budget for “job creation”.
Raw cash does not create jobs, but entrenchment of consistent
and right policies, frameworks and regulatory environments do.
For example, how can government set aside N70 billion to save
our textile industries (and the thousands of jobs in that
sector) but in the same week, lift the ban on the importation of
cheap Asian textiles? And why should government borrow just to
pay public sector wages, while spending on capital projects that
would create direct jobs and the environment for indirect jobs,
remain critically underfunded?
Employment and unemployment are indicators, not predictive
factors for economic success. In most places in the world, job
growth leads to economic growth and vice versa. So we cannot
claim that our economy is growing when it is not creating jobs.
Government needs to raise capital expenditures substantially –
by building more schools, roads, bridges, water systems,
electricity networks and other projects that facilitate job
creation. Worrying about deficits but doing nothing about
business opportunities amounts to doing nothing about the
economy.
The creation of an environment in which innovation and
entrepreneurship flourish – thereby creating jobs and
stimulating economic growth is the responsibility of government:
only a naive leadership would abdicate the responsibility of
providing jobs for men and women who are willing and able to
work. It has come to a point where government must tie every
naira of public expenditure to job creation: If several
companies are bidding for a public contract, apart from lower
costs and competence, one of the criteria should be the number
of jobs each firm would generate.
Government must consider awarding the contracts to the firm that
promises to create the most jobs – and follow up to ensure that
the jobs are actually created. If this strategy is adopted by
the Federal, states and local government levels in the award of
contracts, more jobs would be created weekly and this would have
multiplier effects on the economy as well.
At the moment, many sectors capable of creating jobs for
Nigerians remain untapped. Tourism alone can create millions of
jobs, but which tourist will visit a country that is as unsafe
as Nigeria? Agriculture – potentially the largest employer of
labour has been left largely at subsistence. Whilst commending
the initiative to establish the Agricultural Sector Intervention
Fund, the N200 billion funds were placed in interest yielding
bank accounts for a long while, and have therefore not made
positive impact on the sector. Yet, this is a sector that can
earn more foreign exchange for Nigeria than oil.
Education – where millions of vacancies also exist or can be
created is chronically underfunded, and the informal sector –
which is three to four times the size of the formal economy, has
been left to its own devices because formalisation channels are
difficult to reach – so an important source of tax revenues
remains ignored.
There is an urgent need to reform the various agencies involved
in creating employment and alleviating poverty. The National
Directorate of Employment (NDE) as it currently stands can only
create what amounts to a drop in an ocean: the National Poverty
Alleviation Programme must be reformed from being an outpost for
the distribution of Indian manufactured tricycles; the Small and
Medium Scale Enterprises Development Agency (SMEDAN) must help
nurture small and medium businesses in Nigeria because SMEs are
key to job creation and the Bank of Industry must step up to
save the real sector from imminent collapse.
In short, all these agencies must come together – urgently - to
review the job creation master plan for Nigeria. We need to
create a minimum of three million jobs every year to begin to
tackle the unemployment situation in the country.
It is easy to say we should give President Jonathan more time,
forgetting that he has led this country for nearly 500 days. The
question on the lips of those who “voted Jonathan and not the
PDP” must be, Mr. President, where are the jobs?
Article culled from Thisday
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