essay on unemployment in nigeria

A third of Nigerians are unemployed: here’s why

Professor of Economics, University of Lagos

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Ndubisi Nwokoma does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.

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The Nigerian Bureau of Statistics recently published the country’s unemployment rate for the fourth quarter of 2020 , reflecting a continued deterioration during the COVID-19 year. The unemployment rate for this period stood at 33.3% . Ogechi Ekeanyanwu, from The Conversation Africa, asked Ndubisi Nwokoma, an economics professor, to provide the context.

How is unemployment measured?

Unemployment is when people are ready, able and willing to work, but do not find work. By the International Labour Organisation definition, a person is employed when they work at least 40 hours a week. The working age is regarded as between 15 and 60. Currently, 33.3% or 23.2 million of the about 70 million people who should be working in Nigeria are out of work. An acceptable level of unemployment would be 4%-6%.

The country’s underemployment rate – people who work less than 20 hours a week – is also high at 22.8% .

What’s driving unemployment in Nigeria?

One factor is the critically poor state of the economy. The economy has not been in good shape for the past five years and first went into a recession in 2016 .

In 2020 in the wake of the COVID-19 pandemic it plunged into another recession – its worst in four decades . It recorded gross domestic product contraction of 3.62% in the third quarter of 2020.

There’s been a lot of uncertainty, largely due to policy inconsistencies, about where people should invest. This cuts across various economic sectors.

Since the current government came into power in 2015, there has been a lot of policy change with the “command and control” posture adopted in managing the economy. For instance, exchange rates were left fixed for the first year of the administration until the distortions in the market became chaotic before some form of flexibility was allowed in the determination of the exchange rate, following market forces. Also land borders were arbitrarily closed to imports, despite the huge damage it could have on the country’s trade within the ECOWAS sub-region . This had a direct impact on prices of items.

These policy somersaults have caused capital flight. The political uncertainty played a role in the downward trend of markets. In the equities market, huge foreign portfolio investments were lost to the economy. There has also been a downturn in portfolio investments, fixed capital investment, foreign direct investments and capital importation. There was also a record decline in capital importation of about $1,548.88 million in the fourth quarter of 2016, a 15% decrease from the third quarter of same year.

And in the first quarter of 2017, capital importation was recorded to be about $908.27 million .

The result has been job losses and the dwindling capacity to create jobs.

The poor performance of different sectors of the economy, especially the agricultural sector , has created uncertainty and unemployment. The recurring farmer-herder crisis has had a negative impact on agricultural labour and production.

Another issue is Nigeria’s weak currency, which has been bad for manufacturing. As many people only have access to foreign currency through unofficial sources, prices of raw materials for manufacturing have affected the sector and its output. Several organisations cannot scale or employ more people.

The low level of infrastructure in the economy is another critical factor. For instance, farmers need to move their goods to markets. The routes that link the farms to the cities are in poor shape. Power supply is erratic and security is poor . These factors add up to a poor level of investment.

Meanwhile the labour supply is growing. People are graduating from higher institutions, but the demand for labour is shrinking. There are not enough jobs for young people who are leaving school. People with A levels as their highest qualification had the highest rate of unemployment with 50.7%, followed by people with first degree or higher national diploma at 40.1% .

How much worse has COVID-19 made things?

Measures like lockdowns, social distancing, work from home and travel restrictions significantly affected the economy. The aviation sector and related services were one of the worst hit. The entertainment sector – movies, sports, shows – was caught in the stay-home mandate. Small and medium scale industry was also badly hit, particularly micro businesses – those who earn on a day to day basis.

Even with the opening up of the economy, the effects remain. And we’re not sure COVID-19 is going away in a hurry.

States that generate more revenue, and get bigger federal allocations have higher unemployed rates. Why?

I think it is two things.

One is population density. For instance, people flock into Lagos state in search of jobs because there is no industry in their regions. And insecurity and poor infrastructure plague the agricultural sector. When people gather where there’s some industrial activity, the rate of unemployment becomes severe, even though those states have higher internally generated revenue.

Secondly, with the instability of global markets and fall of the oil price, federal collected revenue has dwindled, so there is less money to share to states and they are thus getting less than what they used to get from federal allocations. This affects the ability of a state to sustain employment levels and payment of salaries, given their federal allocations.

How can Nigeria reduce unemployment?

By addressing the causative factors.

The policy framework has to be more stable. The government must address insecurity so people can go about their normal business. The government must also manage the exchange rate so that imported inputs are cheaper. That will expand production and create jobs.

Nigeria must also encourage investment. There’s a very low level of deposit rates. And it is unattractive to invest even in treasury bills or other securities. The rates are low , and the inflation rate is much higher. So every day your money loses value. The infrastructure for small scale production, including electricity supply, is poor and people have to provide their own.

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Unemployment in Nigeria 2022: causes, effects and solutions

Unemployment is one of the most severe social problems facing Nigeria today. It affects all members of society, from the young to the old, and has far-reaching consequences for the economy and national security. In this article, we will look at the effects of unemployment in Nigeria, its causes and some possible solutions to the problem.

Unemployment occurs when people who can work cannot find a suitable paid job for a tangible period of time. The population that falls within this gap are majorly the youth. Unfortunately, the government's efforts over the years seem to yield no fruits since the situation continues to deteriorate.

What are the problems of unemployment in Nigeria?

The country has an unemployment rate of about 33%, which means that about one in four Nigerians is unemployed. That is a very high unemployment rate, which means that many people in the country cannot find work. So why the high unemployment rate in Nigeria?

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• One reason is that the country has a large population. With a population record of as high as over 200 million, Nigeria remains the most populous country in Africa. This large population means that more people are looking for work than the available ones.
• Another reason unemployment is high in Nigeria is that the economy is not doing well. Nigeria's economy has been in a recession for the past few years, making it difficult for businesses to create new jobs . The recession has also made it difficult for people to find work because many businesses have had to reduce their workforce.

Causes and effects of unemployment in Nigeria

Runaway unemployment is a cause for concern in Nigeria. It is not only a drag on the economy but also a social problem. There are many factors responsible for unemployment in Nigeria, and some of them include:

• The high population growth rate in Nigeria: The population is growing faster than the economy, so there are not enough jobs.
• The lack of quality education and training: Many Nigerian youths are not adequately educated or trained for the available jobs.
• The corruption and red tape in the Nigerian government: The problem makes it difficult for businesses to operate and creates an environment that is not conducive to job creation.
• The high cost of living: The high cost of living makes it difficult for people to afford basic necessities, let alone save enough money to start their businesses.
• The insecurity in Nigeria: The insecurity in Nigeria makes it difficult for businesses to operate and also makes it unsafe for people to go out and look for jobs.

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These are just some of the causes of unemployment in Nigeria. Many other factors contribute to this problem.

Consequences of unemployment in Nigeria

With over 33% unemployment rate, the country records one of the highest unemployment rates in the world . That has led to many social problems, such as:

• Political instability

Unemployment has also affected the economy. Nigeria's GDP has been declining for the past few years due to the high unemployment rate. The country's debt has also been increasing, as the government has had to borrow money to fund social programs.

The high unemployment rate has also led to a brain drain, as many Nigerians have left the country searching for opportunities elsewhere. That has further exacerbated the country's economic problems.

Unemployment and crime

The unemployment crisis in Nigeria has led to a situation where many Nigerians turn to crime in order to make ends meet. Below are ways in which unemployment can lead to crime.

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• Unemployed individuals may turn to crime as a way to make money . That is often seen in cases of theft and robbery and in more sophisticated crimes such as fraud and embezzlement.
• Unemployment can lead to crime as a way to vent frustration and anger. Many unemployed individuals feel they have been dealt a raw deal in life and may lash out at society by engaging in criminal activity.
• It can also lead to crime as a way to gain status and respect. Many young people, in particular, feel they have nothing to lose by engaging in crime and treat it as a way to earn respect from their peers.

Unemployment and poverty

The huge unemployment problem has led Nigerian society to high levels of poverty. Unemployment causes poverty because when people are unemployed, they do not have any money coming in.

This means they cannot afford to buy food, rent, or even transportation. As a result, they find themselves living in poverty. Unemployment can also lead to mental and physical health problems, worsening poverty.

Nigeria ranks 4th among world's top 10 countries with highest youth unemployment

The most appropriate way to discontinue the cycle of poverty is to create jobs. When more Nigerians are employed, they will have money to spend, boosting the economy.

Unemployment and political instability

One of the most damaging effects of unemployment is political instability. Large numbers of people out of work can lead to social unrest and, in extreme cases, revolution. Nigeria is a prime example of how unemployment can lead to political instability.

Coups and uprisings have plagued the country for decades, most of which can be traced back to high unemployment rates. It only takes a slight provocation to escalate political instability in a country like Nigeria, where the young population is unemployed and frustrated.

The most recent example is the protests that rocked the country in 2020 because of the proposed hike in fuel prices. The protests quickly turned into a nationwide movement against the government. The protesters' drive was anger because of the country's high unemployment and poverty, hence the demand for change.

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Solutions to unemployment in Nigeria

Even amid the deteriorating unemployment problem in Nigeria, it is not all lost. However, by putting in relentless efforts, the government can turn around the situation even though gradually.

What steps should the government take to reduce unemployment?

Some of the solutions that the government can focus on to help solve the unemployment crisis are:

• Raise the retirement age: One possible solution to unemployment in Nigeria is to raise the retirement age. That would see a higher number of people remaining in the workforce longer and hence alleviating the clog in the social security system.
• Encourage entrepreneurship: The government can reduce taxes and regulations on businesses, provide entrepreneurs training and support, and improve financing access.
• Invest in education and training: Investing in education can help improve the workforce's skills and make them more competitive in the global economy.
• Improve infrastructure: The government can achieve this by prioritizing public transportation, telecommunications, and energy investment.
• Promote economic growth: The government can do this by deregulation, tax reform, and improving the business environment.

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What are the effects of youth unemployment in Nigeria?

Youth unemployment has terrible psychological and financial effects on both the individual and society as a whole. Youth unemployment in Nigeria has a number of negative consequences, including a rise in militancy, violent crimes, kidnappings, restlessness, and socially irresponsible behaviour.

What are the main causes of unemployment in Nigeria?

Corruption, neglect of agricultural and other natural resources, poor quality education , a lack of working skills, overpopulation, inflation, and a decrease in economic value are the key reasons for unemployment in Nigeria.

What are the solutions to unemployment in Nigeria?

Some remedies to unemployment include reforming the country's educational system, developing infrastructure, empowering youngsters to work for themselves, and making resources more freely available.

How does unemployment increase the poverty rate?

When people are unemployed, they may be unable to afford to pay for their basic needs. That can lead to them becoming homeless or going without food and other necessities.

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Unemployment is a major problem in Nigeria that needs urgent addressing. The government should prioritize implementing policies that encourage entrepreneurship. These are policies such as investing in education and training and improving infrastructure. These solutions will help to create jobs and reduce poverty. Additionally, the government must promote economic growth to boost the economy and create more jobs. Only then can the country begin to address the effects of unemployment in Nigeria.

READ ALSO: Importance of crude oil in Nigeria's economy well explained

Legit.ng recently published an article on the economic relevance of crude oil in Nigeria. Oil extraction funds a slew of multibillion-dollar investments in Nigeria.

The government uses cash from oil extraction to fund practically all developing sectors, infrastructure, and so on. Furthermore, the sector employs millions of Nigerians and has significantly improved people's living standards.

Source: Legit.ng

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Unemployment in Nigeria: Policy Review and Recommendations

Related content.

One of the major means of survival in Nigeria (picture by Joshua Oluwagbemiga)

This paper, published in March 2021, is an outcome of an online workshop that was organized by Rethinking The Uploaders (RETU) as part of the project " Solving the Major Economic Problem in Nigeria" (SMEPN), on the topic Unemployment: Policy Review and Recommendations . It explores the various unemployment policies introduced by the Nigerian Government and analyzes how effective they are and suggests some practicable solutions to solving unemployment problems in the country. The project is an output of the Global Pluralist Economics Training (GPET). Do you want to take part in the next one, learn about pluralist economics and also learn how to host your own events? Find more information on Summer Academy for Pluralist Economics here .

UNEMPLOYMENT IN NIGERIA: POLICY REVIEW AND RECOMMENDATION

Author: Abdulkhalid Anda Salihu

Conceptual Clarification

According to the World Bank, unemployment refers to the share of the labor force that is without work but is available and seeking employment. The definition varies based on countries' dynamics and metrics for measurement but generally, the International Labor Organization definition is used. In Nigeria, the Nigeria Bureau of statistics categorizes an unemployed person as one who is part of the labor force who do not work for up to 40 hours per week within the reference week (the preceding week before measurement), another important concept is underemployment which in Nigeria refers to any individual who works for only 20-29 hours per week within the reference week. Unemployment differs in form as it could be structural;  which implies a mismatch between what employers require and what potential employees possess in terms of skill set and education. On the other hand, unemployment can be frictional (that contributes to the natural rate of unemployment) which is the time lag between leaving a job and getting another while cyclical unemployment is driven by fluctuation in the business cycle.

Current State of Unemployment in Nigeria

Nigeria's population is estimated by the UN population department at 200 million people in 2020 which is dominated by youth within the age bracket of 15-34 years, indicating a young population. Nigeria Bureau of Statistics (NBS) second-quarter 2020 reports highlighted the unemployment rate at 27.1% up from the 23.1% recorded in Q3, 2018. With a labor force of about 80 million persons (11.3% lower in Q3'18), the largest portion 29.1% or 23,328,460 falls within the age bracket of 25-34. This means that young people are faced with the challenge of getting full-time employment hence either remain idle otherwise settle with menial, part-time, voluntary jobs which are of course regarded as either unemployment or underemployment based on the bureau benchmark.  Although it is important to note that underemployment showed a gradual decline implying that the economy is actually creating employment but largely in the informal sector where the hours worked are not up to the benchmark for full employment but underemployment which is between 20-29 hour/weeks.  The majority of jobs are created in the informal sector at 54%, the private formal sector accounted for 37%, and the 9% left were generated by the public sector all in 2013 (World Bank 2014).

It seems to be like a paradox that a country blessed with an abundance of crude oil, precious and base metals, fertile lands, favorable weather condition, a young population yet still battles with GDP growth, bags the poverty capital of the world, ranks low in the doing business index which stifles foreign and domestic portfolio and foreign direct investment and of course results in insecurity, banditry, and terrorism we see today.

Some Causes of Unemployment Include

There are various reasons for the persistent rise of unemployment/underemployment in the country. Some of which is due to the structure of the economy and the other due to “not so effective” reforms, policies, and strategies to tackle the problem. Andrew Nelvin, partner and chief economist at Price Water Coopers (PWC), highlighted the country's dependency on crude oil proceeds which restrict diversification, hence shut out employment opportunities in other yielding sectors. Also, the oil sector is industrialized thereby requiring less workforce compared to other sectors. Other reasons include population growth particularly the labor force (15-64 years) compared to low jobs created.  The recent outbreak of coronavirus also contributed to job losses through the cut of global supply chains, the collapse of oil prices which dampened our foreign reserves led to exchange rates hike for a country that is import-dependent for consumables and raw materials making it difficult for firms to meet up, as a result, lay off workers. The deficient school curriculum is another reason; given the continuous changing environment in terms of industrial changes, advancement in technology, corporate technical skills, etc. which have created a skills gap, in other words, a mismatch between the supply side of labor (what employers require) and the demand side of labor (what potential employee possess) in terms of know-how and skill set.  Not forgetting the lack of industries in the country to absorb qualified graduates. Most important to note is that lack of industries is among other reasons due to lack of sufficient infrastructure investment in Nigeria.

Historical Reforms to Curtail Wide Spread of Unemployment

Several reforms, policies, and strategies have been put in place to address the problem of unemployment of which some were focused solely to tackle the problem head-on, a couple of them were indirect through poverty alleviation programs, and others were infused into national development plans. Some of the recent programs include Subsidy Reinvestment Program (SURE P), which was introduced in 2012 towards reinvesting savings accrued from fuel subsidy on critical infrastructure projects and social safety programs. The major objective of this program was to employ graduates through internship programs to reduce social vulnerability. Later in 2013 another initiative called University Entrepreneurship Development Programs (UNEDEP) to tackle graduate unemployment.  It was initiated by the Ministry of Trade and Investment aimed at promoting self-employment among youth before their graduation from higher institutions of learning. Youth Enterprise with Innovation in Nigeria (YOU WIN), initiated in 2011, structured to finance outstanding business plans for young aspiring entrepreneurs in Nigeria. And then, the National Social Investment Program (NSIP) in 2017 is infused in the National Economic Recovery and Growth Plan (ERGP) and the recent trader money and N-power initiative. Despite these reforms, we still witness growing unemployment and underemployment in the country to which I blame largely to lack of a technical framework to achieve these reforms and secondly lack of continuity.

Proposed Solution

Investment in Human Infrastructure in Line with Science Technology Engineering and Mathematics (STEM).   

A critical factor of every economy is the quality of its human capital. If well utilized it will accrue lots of prosperity for the country. Luckily, Nigeria does not only have a large population (Largest in Africa, 7th in the world) but a young population with a median age of 18. Since Science, Technology, Engineering, and Mathematics are drivers of innovation and digitization evidence from the Asian Tigers, If reforms are put in place to foster entrepreneurship within the framework of STEM channeled through the improvement of the educational sector, organizing STEM incubator programs, fellowships, and even scholarships, will help educate, equip and improve the quality of the labor force utilize. It's not enough to train the youth on STEM but further how it can be used to build wealth.

Unlocking the Potentials of the Informal Sector                            

Historically in Nigeria, the informal sector contributes about 41% to GDP and employs 68% of the labor force according to PWC Nigeria. Also, the NBS labor force report highlights a decline in unemployment for an individual with no formal education (22% in 2010, 18% in 2020). This is reflective that if the informal sector (SMEs) have improved access to funding, ease in doing business, not forgetting the role of competition in enhancing efficiency in the market, will thrive and create more jobs. On this basis I recommend reforms that will ensure ease in access to start-up and growth funding, ease in doing business reforms, a system to help mitigate risks these businesses may encounter, also providing non-contributory social safety net programs will help.

Role of the Private Sector                               

Of course, the government can't do it all, in developed nations, the private sector is the driver of employment. Private sector participation is very paramount if the problem of unemployment needs to be addressed. I'll borrow the ideology of Efosa Ojomo and Rich Alton in their paper "Avoiding The Prosperity Paradox". They proposed that developing economies can only grow, create jobs and reduce poverty by fostering prosperity through market-creating innovation by entrepreneurs as they create a market for non-consumers (individuals who cannot afford standard products or services for whom there always exists underlying demand).  If entrepreneurs can break complex (big) products and services into affordable bits to create demand for non-consumers, this will spring up aggregate demand, firms earn more and can employ more hands.

The core role of the government

Economic theory suggests that businesses cannot thrive in an environment with poor infrastructure hence the need for economic, social, and institutional infrastructure in terms of power, good transportation networks, information technology, and strong legal frameworks. Research suggests that favorable infrastructure investment with either deficit or non-deficit financing has the potential to create jobs, directly and indirectly. In response to the current revenue shortage in Nigeria to fund infrastructure projects, the Government can adopt other sources of financing like a public-private partnership, blended finance; a mix of multilateral development institutions, and public sector financing which will then crowd-in private sector financing.  As well as improve domestic resource mobilization.

All in all, as interesting as these policies, reforms, strategies, and frameworks may seem they are susceptible to poor implementation, therefore the need for sustainability, and sincere commitment from all stakeholders towards a better nation for all.

National Bureau of Statistics, "Labor force statistics: Unemployment and underemployment report," Q2 2020

PWC Nigeria, Insight and Publication: "Structural Transformation and Jobless Growth in Nigeria", https://www.pwc.com/ng/publications/structural-transformation-and-jobless-growth-in-nigeria.html

Efosa Ojomo and Rich Alton, "Avoiding The Prosperity Paradox," July 2020

The World Bank, https://databank.worldbank.org/metadataglossary/world-development-indicators/series

Mike I. Obadan & Ayodele F. Odusola, "Productivity and Unemployment in Nigeria".

United Nation Population Division, Worldmeter, https://www.un.org/en/development/desa/populaiton/publications/datatabase/index.asp, https://www.worldmeters.info/world-population/nigeria-population

Rethinking Economics The Uploaders (RETU) webinar on Solving the Major Economic Problem in Nigeria, https://www.retheuploaders.org/programs/SMEPN

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Youth unemployment in Nigeria: nature, causes and solutions

• Published: 28 April 2022
• Volume 57 , pages 1125–1157, ( 2023 )

Cite this article

• Olusanya E. Olubusoye   ORCID: orcid.org/0000-0001-8672-7822 1 , 2 ,
• Afees A. Salisu 2 &
• Sam O. Olofin 2  

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This study investigates the nature and causes of youth unemployment in Nigeria, with the aim of proffering evidence-based workable solutions as policy recommendation. Its contribution to the literature on youth unemployment is the joint examination of the nature and causes of youth unemployment, which gives a holistic view and provides sufficient background for designing holistic solutions to the problem of youth unemployment in Nigeria. The study employs a Vector Autoregressive (VAR) model. This describes the spillovers of youth employment among different sectors (Agriculture, Industry and Services) in Nigeria; thus, explains whether the nature of youth unemployment in Nigeria is frictional or not. The study also adopts Panel Autoregressive Distributed (PARDL) model to analyze the short-run and long-run significance of the determinants of youth unemployment, such output level, macroeconomic uncertainties and labour market flexibility. This helps to determine the main causes of youth unemployment in Nigeria and whether the youth unemployment is cyclical or structural in nature. The results suggest that the nature of youth unemployment in Nigeria is non-cyclical, partly frictional, but largely structural. This may explain why youth unemployment is increasing in Nigeria despite government remedial efforts; as government focused on frictional youth unemployment remedial policies and dispelled the potential of youth unemployment being structural in nature. The recommended solutions are fiscal and monetary policy easing and demand-side subsidy programme to dealing with structural youth unemployment. The study also shows the need to enforce relevant extant labour laws and regulations to stem the tide of youth unemployment and underemployment in Nigeria.

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Data availability

The data that support the findings of this study are openly available in the Central Bank on Nigeria (CBN) database at http://statistics.cbn.gov.ng/cbn-onlinestats/DataBrowser.aspx ; Fred Louis data base https://fred.stlouisfed.org/searchresults?st=Nigeria+Real+Exchange+Rate ; World Bank database at https://databank.worldbank.org/source/world-development-indicators and Fraser Institute at https://www.fraserinstitute.org/economic-freedom/dataset?geozone=world&page=dataset&min-year=2&max-year=0&filter=0

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The panel ARDL model may also be referred to as non-stationary heterogeneous panels (see Li et al., 2016 ; Salisu and Isah, 2017 ).

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Acknowledgements

Comments from the Editor and three anonymous reviewers are gratefully acknowledged. The authors also acknowledge the intellectual contributions of Tirimisiyu F. Oloko, Ahamuefula E. Ogbonna, Idris A. Adediran and Kazeem O. Isah.

The authors wish to acknowledge the research support received from the Tertiary Education Trust Fund (TETFund) of the Nigerian Government, under the Research Fund (RF) Project (2019).

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Olubusoye, O.E., Salisu, A.A. & Olofin, S.O. Youth unemployment in Nigeria: nature, causes and solutions. Qual Quant 57 , 1125–1157 (2023). https://doi.org/10.1007/s11135-022-01388-8

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Youth, Unemployment and National Security in Nigeria

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