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Where Are The Jobs? – Nasir Ahmad El-Rufai [Opinion]

By on September 10, 2011

Editor’s note: This guest post is written by Nasir Ahmad El-Rufai, a former Director General of The Bureau of Public Enterprises,  and also the former Minister of the Federal Capital Territory, Abuja.

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 4.7million people captured in the formal sector in the latest statistics from the Pensions Commission is increased by the 3 to 4 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 ten percent of applicants will be successful, but at least 3 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 percent. 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 1 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 percent 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 5 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 percent, while the Finance Minister put it at 21 percent. 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 Yar’Adua administration, our rank fell sharply to 134 and all these countries have overtaken us. This year under President 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 formalization 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 3 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?

  • Larry Arobbo

    To create jobs in a hurry, Nigeria need to make easy the processes for entrepreneurs. In the US, you can register a company from online or on the phone, taking the process out of govt. bureacrats acting as predators. You also do not need 2 to 3 years of rent in advance. Nor do you need your own power generator. Nigeria is the only democracy oblivious to the plight of its electorate. US unemployment is currently 9.1, l can bet you that Obama is having sleepless nights 15 months to election. But things are different in Nigeria.