There was a time unemployment was not an issue in Nigeria, but since 1986 unemployment in Nigeria has been on the increase. The Nigerian economy has undergone fundamental structural changes since the attainment of political independence in 1960. Unfortunately, these changes have not resulted in any significant sustainable economic growth and development to ensure adequate employment opportunities. This was one of the reasons for introducing the Structural Adjustment Programme (SAP) and other reforms in 1986. The core objective of economic reformation and SAP is a total restructuring of the Nigerian economy. This, according to Oviawe was because of population explosion (Oviawe, 2010).
Nigeria, also known as the giant of Africa is the biggest black nation in the world. The country is endowed with vast mineral resources including crude oil and solid minerals. By virtue of her resources, Nigeria ought to have a very strong economy capable of employing all employable citizens. It is a paradox that the unemployment rate in Nigeria has been on the increase to date. In 2016, the National Bureau of Statistics reported a 1.2% rise in unemployment in Nigeria from first-quarter to second-quarter. With this alarming rate, unemployment in Nigeria will increase at a rate of 4.8% annually.
Fast forward to 2020, the estimated unemployment rate should be 31.3%. According to the National Bureau of Statistics (NBS), the actual rate is 21.1% in the third quarter of 2018. This figure is close to our estimate above. Considering the impact of Covid-19, this rate would have doubled or tripled as in the case of the US. This rate is highly discouraging for the youths and graduates of this great country. This is why most of them prefer to pursue their careers within the shores of other promising countries.
Akande (2010) stated that unemployment is one of the developmental problems that face every developing economy, Nigeria is not exempted. The impact of unemployment in Nigeria has been felt more by youths. Nigerian youths from all corners of the country rush to Lagos state in search of white-collar jobs, especially, young graduates. Okafor (2011) added that this rate continues to increase due to the rate at which the tertiary institutions turn out graduates.
There are different types of unemployment including structural, technological, cyclical, and frictional unemployment. I believe that Nigeria is facing mostly structural and cyclical unemployment. This is because there was a total structural change from dependence on agriculture to dependence on oil. This structural change did not just change the structure of the economy, but the taste of her citizens. As a result, Nigerians’ taste for foreign products heightened which brought about cyclical unemployment. Major businesses shifted from manufacturing and production to wholesale and retail, where more profit is made.
This kind of economy makes people intellectually lazy. People will be less productive, less creative, and more corrupt. Because people are less creative and productive, the burden of employment will be shifted to the government. In places where the private sector provides employment, people are usually underemployed, leaving majority clambering for government employment.
Though the major cause of unemployment in Nigeria is structural change and cyclical change in taste, there are other causes. Let us look at other causes of unemployment in Nigeria.
Major Causes of Unemployment In Nigeria
Epileptic Electric Power Supply
Lack of regular electric power supply is the biggest cause of unemployment in Nigeria. This problem is major because it affects creativity and the manufacturing industry. How a lack of electricity has caused unemployment in Nigeria is multi-faceted. Let us consider some of them:
- It leads to a reduction in the number of foreign direct investments into the country. Consider it this way. Nigeria has a large market, this is a great advantage for foreigners to come and invest in the country. But due to epileptic power supply, some of these companies will change their base to a neighbouring country. They do this because running power plants 24/7 will reduce profit levels or even lead to losses.
- Due to this lack of electricity, companies build factories in neighboring countries and provide major employment there. But have representatives in Nigeria to market their products. This, in addition to causing job loss also leads to underdevelopment and dependence on foreign expertise. People who would have gained expert knowledge working with these companies will be denied the privilege.
- Also, the lack of electricity affects local manufacturing companies. This problem has made them less productive, not being able to compete with foreign companies and rising costs. Consequently, product prices are relatively higher than the world market prices and of less quality. This is because they want to survive; doing otherwise will lead to the closure of the company and loss of employment. Onuoha (2016) noted that this is a major cause of unemployment in Nigeria.
- It does not end here; it affects vocational, micro, and medium enterprises. Consider vocational jobs like welders and welding-related artisans who require high electric current to operate. This kind of current can be supplied through public power or by using ‘Lister’ power generator. Many of such people who cannot afford ‘Lister’ become unemployed due to the absence of public power for their work. All these and many more are how epileptic power supply leads to unemployment in Nigeria.
Poor Quality of Education
Education is one of the keys to sustainable development. Unfortunately, Nigeria is yet to understand this after her 59 years of independence. Nations like China and India have turned their economies around through quality education (Hawkins and Rust, 2003; Guo, Huang and Zhang, 2019). Every year, graduates come out from the tertiary institutions in Nigeria with little or nothing to contribute to society.
Thousands of graduates are turned out from universities, polytechnics, colleges of education, and monotechnics each year. There have not been corresponding employment creation to absorb these graduates; rather jobs are lost on a yearly basis. An attempt by the Buhari administration to absorb 500,000 graduates in two years is commendable, though it has not yielded expected results. This is because the government is not resolute at absorbing these volunteers, yet registration will be opened for third batch by July 26, 2020. If they are not given permanent employment, the labour market will receive back the 500,000 volunteers after the Buhari administration.
One of the reasons graduates flood the labour market is due to little or ill-equipped facilities in our schools. Lecturers and instructors render poor services to the undergraduates thereby not equipping them for employment. And so, the graduates come out of school half-baked, without practical background to make a good impact on society. Neither are they able to defend the certificates which they are holding. According to Ayobolu (2016), the result is that they add to the unemployment level of the country each year.
Lack of Skills
Another problem that is closely related to the above as a cause of unemployment in Nigeria is lack of skills. Lack of skills, especially, among graduates is a major reason for the high unemployment rate in Nigeria. Many Nigerian youths have despised acquisition of skills, thinking that the time spent on such is wasted. They usually opt-in for so-called ‘easy’ ways of making money. With such a mentality, they will outgrow middle-age without any skill to fall at, thus becoming liabilities to themselves and others.
With skills, one can be self-employed, and a potential employer of labour in the long run. Even if they do not provide employment, they will at least be useful to themselves and their families. A skillful person can adjust to the environment and at least, feed himself and his household appropriately. It is, therefore, recommended that graduates should humble themselves to do practical training or apprenticeship in workshops. For example, graduates with engineering backgrounds can do an apprenticeship with a technician to gain practical knowledge. In that way, such graduates will be fully equipped for employment. Moreover, where employment is not forthcoming, they can be self-employed and help reduce the unemployment rate in Nigeria.
Negligence of Agriculture and Other Natural Resources
Another cause of unemployment in Nigeria is the negligence of the agricultural sector. Nigeria is blessed with many unutilized resources which are enough to gainfully engage every unemployed person. But the craze for quick money has made both government and individuals direct all attention to only the oil industry. Only recently, due to the dwindling oil revenue have the government diverted attention to the agricultural sector. Those who are older would recall that the Federal Government and the Regional Governments of Nigeria managed the country with agricultural and other natural resources before the ‘oil boom’.
In those days, cocoa production was the mainstay in Western Nigeria (with the famous Cocoa House built from the proceeds); groundnut production was the mainstay in Northern Nigeria with the fame of the ‘Groundnut Pyramids’ back then; coal from Udi in Enugu, was the mainstay of Eastern Nigeria while rubber and palm oil were the mainstays of Midwestern Nigeria.
Corruption is another major cause of unemployment in Nigeria. When we talk of corruption, we always look at the top government officials, but corruption has eaten up every sector of our economy. Corruption is instrumental to the other causes of unemployment in Nigeria itemized above. It is virtually everywhere from our families to churches and every sector of our economy, including micro-enterprises.
Corruption can be defined as immoral action which could involve bribery, embezzlement, or misappropriation of public funds for personal use. A corrupt government can be said to be a government that makes use of public funds for personal and selfish use. Corruption is a cause of unemployment in Nigeria because money meant for productive resources is embezzled. When money meant for building schools and industries are embezzled, employment is traded for personal use; the result is a massive increase in the unemployment rate in Nigeria.
The transparency international ranked Nigeria 146th out of 198 countries in 2019. The corruption in Nigeria makes the government spend less on the welfare of the citizens of the country. When corruption is taken as a normal routine, functions that are to be performed by three or even four persons are taken up by only one person. And that one person collects all the salaries meant for the three or four persons.
Salvaging the Unemployment In Nigeria
Having understood the causes of unemployment in Nigeria, let us proffer solutions and possible ways of salvaging the situation.
Reduction in Tax Rate
Tax reduction is one of the remedies to unemployment in Nigeria. Without going into detail of the Nigerian tax system, the tax reduction will bring the following economic effects.
- It will encourage consumers to buy more through an increase in purchasing power.
- Producers and businesses will produce more, innovate through research & development, and create more employment opportunities.
- It will help reduce operating costs of businesses thereby reducing product prices which reduce the cost of living.
- Tax reduction will also increase aggregate spending, consumers will be able to buy more and that will encourage job growth. Lowered taxes will make businesses more creative and productive.
Reformation of the Educational System
Haven understood the importance of education to nations’ development as typified by China, education will help reduce unemployment in Nigeria. If the education system is effectively reformed, it will help achieve the following in the economy.
- There will be increased graduate skills that will make graduates problem solvers, creators, entrepreneurs, and innovators.
- Students will learn more about practical and real-life issues. They will be able to solve problems than mere theories that are neither applicable nor relevant can solve.
- According to African Manager Initiatives, formal education (university or college education) contributes only 10% of the skills we need to live our dreams. But 70% and 20% of the skills come from practical on the job learning and feedback from peers (Joseph, 2017).
- A reformed university system will not encourage job search over creativity but encourage creativity, innovation, and business opportunity while at school.
- Vocational trades would be encouraged and opportunities given to people to pursue their passion. Everyone must not school to the tertiary level. This will also reduce the pressure of overemphasis on the certificate.
- Students in management courses would be mandated to show evidence of a working business they manage as criteria to graduate. This should also apply to students in the faculty of agriculture.
With a reformed education system, unemployment in Nigeria will become a thing of the past.
Reformation of the Agricultural Sector
Though emphasis has been placed on the agricultural sector from Jonathan’s administration to the Buhari administration, more should be done. If the sector is appropriately positioned, it is capable of absorbing over 50% of the nation’s workforce. There will be an increase in sector turnover, which will increase its input-output coefficient. Modernization of the sector will attract young graduates to engage in the sector. Nigeria should learn from the Chinese economy which economic reform began with the agricultural sector. To reduce unemployment in Nigeria, we should take advantage of our vast population like China and grow this sector. The youth and graduates should be trained in the use of some agricultural technology to improve their productivity. Through irrigation agriculture, the sector should have multiple cropping all year round to reduce seasonal unemployment.
Investing in the Industrial Sector
After the agricultural sector, the industrial sector should be the second largest employer of labour. If the sector is well developed, it helps curb the problem of unemployment in Nigeria. Some of the benefits of a well-developed industrial sector include:
- Increase in capital formation and growth of small and medium scale industries that has the potentials to employ graduates.
- Small and medium-sized firms will have access to information on managing businesses to prevent failure.
- There will be healthy competition in the sector leading to more investment, a better quality of products, and more employment.
To achieve the above, the government should partner with the private sectors to establish manufacturing plants in all the states. Also, the government should adopt a policy of decentralization of the industrial sector to increase employment generation.
Investment in Infrastructural Development
Infrastructure is important in every nation because it helps in overall development. Infrastructure attracts foreign investment as well as motivates local investors. Any serious nation that wishes to develop and create employment for her labour force must pay attention to infrastructure. To fix Nigeria’s infrastructure decay and curb unemployment, the government should:
- Increase its capital expenditure, especially in the area of transportation by building good road networks.
- Subsidize transportation costs for ease access of raw materials by the industrial and agricultural sectors.
- Improve electricity generation and distribution because businesses depend on it. Electricity is important to the growth of micro, small, and medium scale industries.
- Improve the communication system, especially, internet connections. A better and cheaper internet connection in the country will improve the presence of most businesses online.
- Ensure proper evaluation and monitoring of government spending on infrastructure. This will save the country from embezzlement.
Recurrent Expenditure should be Drastically Reduced
In Nigeria, recurrent expenditure takes a greater share of the budget more than capital expenditure. This has been consistent over the years, e.g., in 2018 it was 3.51 trillion as against 2.87 trillion for capital expenditure. In 2019, it was 4.07 trillion as against 2.09 trillion for capital expenditure, and in 2020 4.49 as against 2.47 trillion. This is clear evidence that Nigeria spends more and invests less. If this scenario continues, Nigeria will continue to lag as a third world country. It is therefore important that all concerned, especially the government take some measures to reduce recurrent expenditure.
- Spending on salaries, allowances, and commissions should be reduced by clamping down on ghost workers.
- Payments made to politicians are huge, it will be better if such payments are reduced drastically. The government and the agencies involved should have the interest of the nation at heart rather than pursuing personal interests.
- Politicians should be made accountable for public funds in a transparent manner.
- The interest rate should be drastically reduced to increase the availability of funds to entrepreneurs. This will assist in creating employment for the populace.
The government alone cannot employ the nation’s workforce. This is where the private sector comes into play. Unemployment leads to many social vices including different kinds of crimes, and this is the case in Nigeria. There are many causes of unemployment, but we discussed only five and looked at a few remedies.
Employment creation is not left in the hand of the government only, but the government needs to provide enabling environment for the private sector. This is why we made some suggestions on how to remedy the situation. If the government takes appropriate steps at implementing these policies unemployment will be a thing of the past.
Akande, O. B. (2010), Youth Unemployment, http://www.lagosstate.gov.ng
Ayobolu, J. (2016), Thinking out of the box to salvage Nigeria’s economy, Orijoreporter, September, 19.
Joseph, E.N. (2017), Causes and Solution to Unemployment in Nigeria, Lagos: EducacInfo.
Okafor, E.E. (2011), Youth Unemployment And Implications For Stability Of Democracy In Nigeria. JSDA, 13, 1.
Onuba, I. (2016), Nigeria’s unemployment rate rises to 13.3% -NBS, The Punch, August, 31.
Oviawe, J.O. (2010), Repositioning Nigerian Youths for Economic Empowerment Through Entrepreneurship Education, European Journal of Educational Studies, 2. 2, pp. 113-118.
Hawkins, J.N., and Rust, V.D. (2003). Economic Reform and Higher Education in China. CIDE Occasional Papers Series: Higher Education. California: CIDE and GSEIS, Vol. No. 2.
Guo, L. Huang, J., and Zhang, Y. (2019). Education Development in China: Education Return, Quality, and Equity. Switzerland: MPDI Journal on Sustainability.