ECONOMY - 01 APR 2021

Nigeria's youth unemployment problem

Nigeria's youth unemployment problem
Unemployment. Source: ILO via Flickr

It is not news to say that Nigeria has a lot of problems. But there is a subset of Nigeria’s issues that can be more injurious to the country than others if they aren’t addressed soon because of the sheer scale of their potential impact. One that needs more attention in the policy space is youth unemployment.
 

We're younger than you think

Nigeria's population numbers from our censuses are hard to trust, so we have to rely on estimates from mostly external sources. Nigeria’s own National Population Commission links to WorldoMeter for statistics on Nigeria’s population. From there, we can learn that the median age is 18 years old. Similarly, according to the World Bank, the total population under 15 years is about 44%. The large young population is not a particularly bad problem to have. This young population will grow and theoretically join the working force to contribute to society in different forms. However, the issue becomes more obvious when one asks whether the country is ready for the influx of youth.

For this young population to be productive, they need to be working. However, the jobs situation doesn’t look good. In fact, it’s the worst it’s been in quite some time. Unemployment is at 33%, and underemployment (defined as people working 20-29 hours per week) at 23%. For the youth (15 – 34 years, about 50% of the labour force), those numbers are 42% and 21%, respectively, higher than for any other age group. 

 

Are these numbers reliable?

When the Q2 numbers came out last year, there was talk that perhaps the (then) latest NBS statistics were less reliable because of its sample size. Ten million people had gone missing from the statistics and as of the latest report, 11 million more followed. It didn't help that before then, we hadn't had official unemployment numbers since 2018.

 It is worth noting that whatever errors that could introduce bias would have to explain why the same survey showing that the working-age population went up by about 5% since Q3 2018—slightly above its long-term trend—is significantly wrong about its labour-force estimates.

Especially since such a startling phenomenon, 21 million people disappearing from the labour force in a little over two years, would rightly draw extra scrutiny to ensure its accuracy. While it is possible that COVID, NBS budgetary factors, the switch to telephone surveying, could all have made the 2020 estimates wonky, the answer could be right in front of our eyes. Maybe 21 million people left the labour force within the last couple of years because they’re so discouraged by the economic environment that they have given up on looking for jobs. Is that so far-fetched? But for the purposes of focusing on youth unemployment, whatever possible error shouldn’t have a bias towards any age group, leading to fair confidence that unemployment is particularly worse for Nigeria’s youth—as the numbers say.

So as we look ahead towards this coming wave of entrants into the labour force, where are the jobs for them?

If I’m looking for a job, I’ll need to take stock of the skills I have and hope to find opportunities that match. A part of the labour market crisis is that many job seekers simply don’t have the skills certain employers are looking for. Rather, there’s a surplus of what is referred to as ‘unskilled’ labour.

 

Does schooling help?

For 80% of the labour force, the highest level of education completed is senior secondary school. There are quite a few reasons why this is so. One that doesn’t look likely to change anytime soon is that Nigerian universities simply don’t have enough room. We have 150 universities with a capacity of 600,000 pupils. 75% of applicants were getting turned down from 2010-2015. As the larger, younger population grows up, applications are only going to be more crowded. Foreign degrees, an alternative path to tertiary education, are only available to a small slice of the population. When you take university off the table, the labour market options for most people become limited.

As for people who get a university education, it’s not immediately clear that it is beneficial in the Nigerian labour market. Bachelors degree holders have one of the highest unemployment rates for Nigerian education levels, second only to the 1% of the labour force that has only completed A'levels. One possible explanation for this is that the current university education does not prepare students for the workforce. Another is that there aren't many jobs available, both 'skilled' and 'unskilled'.

So basically, we have a labour market that doesn’t have enough opportunities for the people, an education system that isn’t producing adequately skilled job seekers, plus a whole lot of influx into the system in the coming decades. Are we preparing for this?

 

What the government is up to

Lai Mohammed, Minister of Information and Culture, recently said, “No government in the history of this country has ever methodically and seriously put in place measures aimed at addressing poverty alleviation and creating jobs for youths like this administration.” To back up his statement, he pointed to numerous initiatives the Buhari administration has implemented: N-Power and GEEP, which I’ve previously talked about here, a new ₦75 billion fund called the National Youth Investment Fund, a Graduate Internship Scheme, N-TECH, N-AGRO, and other similar programs.

Clearly, the government knows focusing on the youth is important. However, it still doesn’t seem to understand that this isn’t a problem it can solve by providing small loans and grants or providing temporary jobs (which many of the programs above boil down to). The government isn't big enough to prop up the entire economy itself, not for lack of trying. In real terms, government spending is lower than it was only a decade ago, at 5.7% of GDP in 2019. But this means non-government economic activity accounts for almost all of GDP—just under 95%. It is this 95% that needs to be enabled to unleash economic growth. And, of course, structural problems are acting as obstacles that don’t have simple solutions.

 

What can we do?

There are many opinions on how to address the structural problems the Nigerian economy faces. With youth unemployment, there are problems on both the supply and demand side. A bulk of our labour force will be educated only up to the senior secondary school level for the foreseeable future. It is important to identify and support industries that will need and increase the demand for ‘unskilled’ labour.

A huge part of this is a regulatory system that supports entrepreneurs. The story of Lagos state's merry-go-round with bike-hailing businesses is probably one of the clearest examples of what not to do, with unclear regulations and bans putting up roadblocks in the growing dispatch riding sector. 

Outside of the service sector, manufacturing, construction, and agriculture seems to be the best options to soak up the millions of unskilled workers due to their labour-intensive nature in developing countries. But people need to be incentivised to become employers, and economic history has shown us that profit is a great motivator. The government has to balance the line of ensuring businesses aren't exploitative but are still free enough to be active entrepreneurially. Until more people think they can successfully start businesses in these sectors and prosper, we won't have enough jobs in the economy. 

On the supply side, the education system needs to be set up so that people leaving, either at the secondary or university level, have employable skills. It is a multidimensional problem. There are many ways the current system lags behind the demands of a modern economy. The long-term solution would require a multi-pronged approach to address the different infrastructure, curricula, and knowledge gaps, almost a complete overhaul of what we have now. There needs to be more active collaboration between the private sector and education institutions in the short term, while other alternatives to university education also have to be encouraged.

 

What could go wrong?

Looking ahead, it is easy to see that this is the best time to take advantage of a young population. Ideally, the young population contributes to society with work and tax obligations, making it easier for the government to provide welfare to those who need it. If we miss out on this, when this generation ages, more would have to be asked of the future working population to support retirees who are dependent on people and the government, worsening Nigeria's already high dependency ratio which is at 86%.

Before then, the problems would start to pile up in the present. Young people who can’t find jobs still need to eat. With few legitimate options, illegal ones will become more attractive. It’s not surprising that it seems there are more and more ‘fraud boys’. Other criminal activities could become more popular. Research has shown that youth unemployment increases all sorts of crime.

Taking Nigeria’s growing insecurity problem, the years-long battle with Boko Haram and other terrorist groups, and throwing in millions of disgruntled and hungry young people in a boiling pot could explode in all of our faces.

We can’t stumble our way through dealing with youth unemployment. The situation is already bleak, but Nigeria’s demographic trend means it can still snowball into something that puts the country in a truly precarious position.

Soala Ekine

Soala Ekine

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