Double trouble: Job losses and inflation hit Nigeria

The National Bureau of Statistics (NBS) painted a miserable picture of the state of the Nigerian economy with its recently released unemployment figures. It is, indeed, an ugly picture and double shock for an economy where citizens are losing jobs and inflation is rising.

According to the report, the number of jobless Nigerians accounts for 27.1 percent in Q2 2020 of Nigeria’s total labour force population of about 80.29 million while those in jobs that underutilised skills, time, or education accounted for 28.6 percent.

Given that this is the most recent unemployment data since 2018, we believe this is at best a reflection and does not ultimately capture the reality of things. The data implies that unemployed Nigerians have only increased by 4 percent in the last 2 years despite a large number of graduates flooding into the labour market amid slower business activities and economic growth.

The grimmer outlook for this important economic indicator raises concern given the COVID-19 induced upheavals in Nigeria and the inability of its policy makers to make market informed and stimulating decisions to address challenges. Nigerians are losing their jobs. Those who had no jobs before the pandemic face a slimmer chance of getting one as most businesses are more committed to staying afloat than incurring extra costs in this trying time.

It is quite disturbing that Nigeria’s unemployment rate is increasing at a time inflation is ticking northwards towards 13 percent. The NBS also revealed on Monday that inflation rose to 12.8 percent. Beyond the fact that every percentage increase in the general price level of goods – without a corresponding increase in income – will see purchasing power of households decline by the same percentage, it deepens the misery of unemployed individuals.

Nigeria, with a misery index of 39.9 percent, is not only reeling from rising unemployment but also a stubbornly high inflation rate. This provides an indication that there is a mismatch between the earning capacity of people and the cost of living in Nigeria.

We must not be quick to blame these expositions on the impact of the COVID-19 pandemic. The pandemic has basically brought to light the effects of myopic and deteriorating economic policies of Nigerian policy makers over the years.

The recent data on Nigeria’s unemployment and inflation rate respectively should give policy makers a sense of direction on what must be focused on to fix the economy. To boost employment, the FG must be willing to create an economy where businesses can thrive and create jobs. This means putting an end to regulations that stifle business activities, and prevent private and foreign capital.

Also, the FG may want to rework the Economic Sustainability Plan to be more realistic and not overly ambitious, else we risk another dead plan aimed to spur economic recovery. The Mass Housing Strategy, for examples, envisages the creation of 1.8 million jobs starting with the construction of 300,000 homes in the next 12 months. Though this is doable, it needs a well-funded, well-structured plan with wholly private sector direction and execution strategy.

Also, the FG plans a Solar Power Strategy that will support 250,000 jobs and impact up to 25 million beneficiaries through the installation of 5 million Solar Home systems and mini-grids which will cost N240 billion. Across Sub-Saharan Africa, Asia and small island nations, with some in Latin America, there are about 5,000 mini-grids already installed. Five million solar home system is rather too ambitious.

A report estimates that 238 million households will need to gain electricity access in Sub-Saharan Africa, Asia and island nations by 2030 for the achievement of universal access. This is aimed to serve almost half of this total. This will require capital investment of an estimated $128 billion (N49 trillion) between 2020 and 2030. These, to a large extent, have capacity to create jobs in great multiples.

As it is at the moment, we see hope in fixing Nigeria’s unemployment and inflation pressures only in complementary efforts of the CBN and the government. Such efforts would require well thought out policies and strategies around creating jobs, boosting household income and lowering cost of essential commodities.

All these, in our view, will come in handy at times like this if the efforts are well coordinated, sincere and fit-for-purpose.