Youth unemployment: Why the number is rising
Sulaimon Olanrewaju writes on the rising youth unemployment in the country and government’s efforts to bring succour to the people.
According to the National Bureau of Statistics (NBS), unemployment rate rose from 18.8 per cent in the third quarter of 2017 to 23.1 per cent in the third quarter of 2018. The bureau also reported that the number of unemployed people increased from 17.6 million in the last quarter of 2017 to 20.9 million in the third quarter of 2018.
It added, “The economically active or working-age population (15 – 64 years of age) increased from 111.1 million in Q3, 2017 to 115.5 million in Q3, 2018.
“The number of persons in the labour force (i.e. people who are able and willing to work) increased from 75.94 million in Q3 2015 to 80.66 million in Q3 2016 to 85.1 million in Q3, 2017 to 90.5 million in Q3, 2018. The unemployment rate accordingly, increased from 18.8 per cent in Q3 2017 to 23.1 per cent in Q3, 2018.”
That has been the pattern for a while.
According to the bureau, unemployment rate in the country rose for nine consecutive quarters from the last quarter of 2014 to the last quarter of 2016. The rate went up consistently from 6.2 per cent in the last quarter of 2014 to 14.2 per cent in the last quarter of 2016. It later rose from 16.20 in the second quarter of 2017 to 18.80 in the third quarter of that year. However, youth unemployment fared worse than that as it climbed up to an all time high rate of 33.10 per cent at the end of the third quarter of 2017, from 29.50 per cent at the end of the second quarter.
Rising unemployment rate is a global phenomenon. Unemployment rate in the USA rose from five per cent in 2007 to nine per cent in 2011. In the United Kingdom, it rose from 5.3 per cent to 8.1 per cent, while the rate in Spain increased from 8.6 per cent to 21.52 per cent. Due to the recession in Greece, unemployment rate has increased from 8.07 per cent to 18.4 per cent, while it moved from 4.8 per cent to 14.3 per cent in Ireland.
African countries are also affected. Unemployment rate in South Africa is 25 per cent, in Egypt it is 11.8 per cent, in Botswana it is 17.5 per cent, in Angola it is 25 per cent, in Kenya it is 11.7 per cent and in Namibia it is 51 per cent.
However, the level of unemployment in Nigeria has become a source of concern to many people. Yearly, tertiary institutions churn out fresh graduates without any provision made for their absorption into any of the nation’s sectors. Four, five and even six years after graduation with a good result, many Nigerian graduates are still roaming the streets in search of the ever receding employment opportunities. It is the hopelessness and helplessness of their situation that drive many of them to criminal activities. The nation’s rising unemployment rate is the major fuel for the insecurity situation the country is currently enmeshed in. Crime in the country has gone hi tech because many of those engaged in it are highly educated.
Causes of unemployment
Faulty education system
Graduate unemployment was unheard of in the past. At a point in the history of this country, before graduating from the university or the polytechnic, there was an assurance of employment for the Nigerian undergraduate. This was the time when corporate organisations would storm the few campuses in the country then to offer employment to graduating students. That sounds aeons ago. With the experience of the current generation of university graduates, to them this has a ring of a cock and bull story. But it is not.
Tracing the history of the current crisis, Dr Kester Ojokheta, a senior lecturer at the Adult Education Department of the University of Ibadan, said in the pre-colonial Nigeria, emphasis was on technical and vocational training. “That was the period we call traditional education system. At that time, the child was apprenticed to a competent practitioner, from whom he learnt the practice. When the colonialists came, there was a shift from technical education to liberal education. That was when we started having graduates in Arts and Social Sciences who do not have any specific skill. With the embrace of liberal education, all vocational centres went down.”
He added that eventually the nation started producing more graduates in liberal education than the system could absorb. This glut resulted in graduates being unemployed, a situation that gets worse each succeeding year with the yearly increase in the number of unemployed graduates.
Hostile economic environment
But just as the mismatch between industry requirement and skills of graduates result in unemployment, so has the hostile economic environment led to a number of young graduates being left in the unemployment lurch. Many of the manufacturing companies in the country are operating far below their installed capacities because they, in most cases, have to source their own electricity, water and other amenities that companies in other countries take for granted. All of these additional costs increase their cost of production and as a result their prices cannot compete with imported items. The effect of this is that while imported items are cheap, the locally produced ones are comparatively expensive. The price differentials force Nigerians to go for imported items. This has led to local companies not being able to produce at maximum capacities with the effect that many of them have been unable to employ as many hands as they would have had to had they been producing at maximum capacity.
The inability of the manufacturing sector and the private sector generally to employ many Nigerian jobseekers have a telling effect on the nation. The reason is that there is a limit to the number of people that the government can employ. Unlike the private sector that can expand its operation and thereby increase its workforce, the business of government is largely administrative and it hardly expands. This means that the capacity of government at all levels to employ is restricted. So, the private sector is really the one that has unlimited ability to offer employment opportunities. But when the sector is incapacitated as a result of a number of factors, the chance of many getting employed becomes very dim.
Just as the manufacturing sector is suffering, so is the small and medium industries (SMI) sector. In other climes, this sector is a major employer of labour. In North America and Europe, the contribution of SMIs to the development of countries in these regions is enormous. The sector employs up to about 50 per cent of the workforce of the countries, contribute between 40 and 60 per cent to the Gross Domestic Product (GDP), while contributing between 30 and 50 per cent to exports. The sector even fares better in Asian countries (China, Indonesia, India, Malaysia, Japan and South Korea) where it employs up to 90 per cent of the workforce and contributes about 40 per cent to the GDP. The SMIs in these countries are doing well because of deliberate government policies to encourage them. In the Asian countries in particular, young people are encouraged to set up their own small companies and see how they can improve their own lot through them instead of seeking employment elsewhere. With funds and other requirements supplied by the government, it is not difficult for young people to embark on their own businesses. The encouragement given to young people to set up their own businesses in Europe, Asia and North America has produced good result with many young people under the age of 30 coming up with great ideas that have changed the way we live. However, in Nigeria, the reverse is the case. Though young people are urged to set up their own businesses, the environment is so stifling that many of the businesses do not last for more than two years before collapsing and the promoters thrown back into the labour market.
Commenting on the fate of SMIs in Nigeria, a former Director General of the Small and Medium Enterprises Development Agency of Nigeria (SMEDAN), Alhaji Muhammad Nadada Umar, said almost 60 years after independence, Nigeria had no plan or culture for the development of small and medium enterprises until recently. He added that annually universities graduate about four million people with less than 200,000 getting jobs “because we inherited a culture that once you graduate, you get a job. The unemployment challenge is so bad in the country that even if two million people are given jobs on a quarterly basis, it will still not salvage the situation. Empowering SMEs is the way to go.”
Some policies of the government have also resulted in unemployment in the country. Before Professor Charles Soludo became the Governor of the Central Bank of Nigeria (CBN), there were 89 banks in Nigeria. With the consolidation policy introduced by the Soludo-led CBN, the banks were reduced to 25 in number. It is given that the reduction in the number of banks in the industry also led to the shrinking of employment opportunities in the industry. Ditto for the insurance industry. Following the success of the consolidation of the banking industry, the regulators of the insurance industry also jacked up the paid up capital of players in the industry with the effect that the number of insurance companies also plummeted and with it the available opportunities for employment in the industry.
Then recently, the foreign exchange policy of the Federal Government made it extremely difficult for a number of manufacturing companies to source raw materials with the effect that many of them either scaled down their operations or shut down completely.
Neglect of agriculture
Another cause of unemployment is the attitude of many Nigerians to agriculture. Agriculture is the biggest employer of labour in the country with about 70 per cent of Nigerians engaged in one form of agricultural practice or the other. However, most Nigerian youths do not want to touch agriculture with a barge pole because it is seen as hard labour; everyone is busy looking for blue collar jobs, even those with degrees in agriculture related disciplines. This particular development has two consequences on the nation. The first is that the army of unemployed youth keeps swelling together with the attendant security threats. The other is that the country is also faced with the threat of food insecurity because old people who are used to the old way of farming are the ones left to practise agriculture.
Talking about how government crippled the agriculture sector, Chief Daniel Okafor, President of Potato Farmers Association of Nigeria, said potato farming could create vast employment opportunities as well as earn the country a fortune if potato farmers were given necessary encouragement. “I can assure you that given the necessary support, potato farming can create thousands and millions of jobs. Instead, what we see here is that a proposal is written by someone and upon submission; it is given to another person who didn’t know where you conceived the idea and would obviously not be able to implement it.”
The current administration has been making efforts to reduce youth unemployment through some schemes.
Since becoming the nation’s helmsman, President Muhammadu Buhari has not hidden his intention to tackle unemployment headlong. In March last year, the government, through the intervention of the Bank of Industry (BoI), launched a N10 billion Youths Entrepreneurship Support (YES) project to empower youth with loans to start businesses.
The scheme is intended to create about 36,000 jobs annually.
According to BoI, a participant under the scheme could access up to N10 million loan which is repayable between three and five years. The loan attracts a single digit interest rate. Applicants must, however, present NYSC or higher education certificate as collateral to qualify for the loan with two external guarantors.
Accelerated Agricultural Development Scheme (AADS)
The scheme, which is managed by the Central Bank of Nigeria (CBN), is to create 360,000 jobs annually. According to the CBN Governor, Mr Godwin Emefiele, the scheme is targeted at unemployed youths of between the ages of 18 and 35.
The plan is to employ and train 10,000 youths from each of the states who are interested in sustainable and profitable activities along the agriculture value chain.
The CBN governor explained that “This scheme has been designed to create an ecosystem with the active participation of the public sector, state governments and the private sector.”
N-Power is a job creation and empowerment programme for young Nigerians between the age brackets of 18 and 35. The scheme is divided into two categories; graduate and non-graduate.
The graduate category, also known as the N-Power Volunteer Corps, is meant for graduates who are between 18 and 35 years of age. It is a paid volunteering programme of a two-year period. The volunteers undertake their primary tasks in identified public services within their proximate communities in one of four areas; N-Power Agro, N-Power Health, N-Power Teach and N-Power Tax.
The non-graduate category has two programmes; N-Power Knowledge and N-Power Build. Through these programmes, young Nigerians are trained to build a knowledge economy equipped with world-class skills and certification to become relevant in the domestic and global markets. According to the government, about 200,000 beneficiaries are currently enrolled in the N-Power scheme.
While lauding the efforts of the government in scaling down the rate of unemployment in the country, Dr Tade Alajiki, an economist, said the government is not equipped to create employment opportunities, adding that the best it can do is to provide enabling environment for private businesses to thrive. According to him, when businesses thrive, they will be able to create employment opportunities.
“For as long as the government tries to get involved in job creation, we shall continue to have issues with unemployment because there will always be an interplay of politics. The earlier the government understands that it is not cut out for job creation, the better for all of us,” he said.