Unemployment has become a hydra-headed problem in Nigeria as almost every candidate for the post of President in Nigeria, 95 of them, at last count, have unemployment among top three issues to be resolved. But how do you solve a problem without a dimension. How do you determine a value in a simple or quadratic equation without the unknown parameters? The last time unemployment data was released by the National Bureau of Statistics was two years ago (Q2’2020), even before then, there was a gap. GDP is growing at 3.4 percent while Labour productivity in Nigeria is 1.7 percent. This implies that there is a high level of underemployment as well as unemployment. BAMIDELE FAMOOFO writes.
Nigeria, like most developing countries, is experiencing youth bulge. In demographic studies, youth bulge refers to a demographic trend characterized by a large share of the youth and children population. This age cohort pattern is usually experienced when countries succeed in reducing infant mortality while keeping fertility rate high. For example, Nigeria is currently experiencing its youth bulge while most European countries are currently characterized by an aging population.
“In Nigeria, rising insecurity and terrorism could be associated with the feeling of frustration, economic marginalisation, and alienation by the teeming youth population
“
Generally, youth bulge is a time bound phenomenon that is experienced by most countries in the course of demographic transition. It comes with myriads of complexes including demographic dividends and challenges. It could catalyze economic growth through increased labour participation and human capital development. In periods of youth bulge, more youth adults are expected to enter the working population thereby increasing labour supply.
If these cohorts are fully engaged, aggregate supply will substantially increase, dependency ratio will fall, income per capita will rise and economic inequality will fall.
Chief Executive Officer of Financial Derivatives Company Limited, Bismarck Rewane, described youth bulge as a golden era for any economy, noting that the harvest of opportunities that youth bulge offers will depend on how it is harnessed.
He listed Asian countries like South Korea and China as examples of nations which exploited the golden opportunity.
“They understood the era and moved by initiating policies that helped to harness the youth’s potential,” he said.
Commenting on the strategies deployed by South Korea and China to reap the harvest of youth bulge, Rewane said, “First, they created an environment within which small businesses could flourish. China rigorously pursued programmes that helped its 269 million youths population in assessing resources and running small businesses.
“Apart from creating a conducive space for its youths to do business, China also created an environment that is attractive to foreign multinationals to see their economies as a choice destination for investment which led to the creation of massive jobs for the youth population.
“The third thing that China did to get to the height it has attained today was to begin transitioning its economy from agrarian-based to industrial based economy and currently it has begun a necessary transition to services without diminishing its industrial dominance. China also diminished the power of its landed elites by allowing for social mobility,” Rewane disclosed.
Consequently, China lifted 800 million people out of poverty in one generation, and continued to sustain its output growth rate above the global output growth for more than two decades.
Nigeria is failing to repeat China’s success
However, Nigeria is failing to harness its youth bulge. Instead of a demographic dividend, the country is on the path of harvesting demographic crises from its youth bulge.
Demographic theorists posit that if youth bulge is not converted to economic opportunities, it will turn out to become demographic crises.
The latter appears to have become the nation’s hallowed experience. The golden era has become an era of growing unemployment. Young persons between the age of 15 and 34 years make up 43 percent of the labour force in Nigeria with nearly half of the youth labour force being unemployed based on NBS 2020 survey.
The unemployment rates for persons between the ages of 15 and 24 years and 25 and 34 years were estimated at 53.4 percent and 37.2 percent respectively.
In addition, about 21 percent of persons who are between the ages of 15 and 34 years are underemployed.
Empirical research suggests that there is strong correlation between poorly managed youth bulge and armed conflicts. When the youth population rises, as in the case of Nigeria, the youth age cohort could feel marginalised if they are not gainfully employed.
Report published by FDC in April hinted that the feeling of economic marginalisation by the youth cohort has been associated with rising insecurity in the Sahel and Middle East.
In Nigeria, rising insecurity and terrorism could be associated with the feeling of frustration, economic marginalisation, and alienation by the teeming youth population.
In the past decade, estimated 87,903 people have died through Boko Haram, state actors, sectarian actors and other armed bandits and terrorists. The increasing population of Nigerian youths that are into terrorism today confirms Dabbs view that cost of recruitment into armed criminal groups is low in the era of youth bulge.
Cost of insecurity in Nigeria
Economic Think-tanks at FDC said rising insecurity represents a huge opportunity cost for the economy.
“It distracts policy makers and economic managers from focusing on growing the economy to focusing on fighting insecurity. Resources that would be used for the provision of education, development of human capital and boosting economic activities will be diverted to fighting insecurity,” they lamented.
Putting their argument in perspective, figures were provided to drive home their claims.
“In the past decade, Nigeria has spent about N6trillion on fighting insecurity, while spending only N5.4 trillion on recurrent expenditure in the education sector in 40 years, which is between 1980 and 2020.
Institute of Economics and Peace also reported that the growing violence in the country cost Nigeria about $132.59 billion (or N50.38 trillion) or eight percent (8%) of GDP in the past decade. Thus, instead of harvesting demographic dividend from its bulging population, Nigeria has rather harvested huge economic loss, crisis and ballooning future costs in terms of debt overhang.
Chief Executive Officer, Centre for the Promotion of Private Enterprise, Muda Yusuf, called on the government to act urgently to tackle the insecurity challenges in the country before it finally goes out of hand as he said the menace has troubled the economy greatly.
His words: “The situation continues to pose a very serious challenge to lives and livelihoods. Investors’ confidence has been greatly undermined with investments across all sectors being adversely affected. When investment is in jeopardy, livelihoods are negatively impacted. Worsening insecurity is adversely impacting lives and undermining livelihoods. This is taking a huge toll on both the social and economic life of the nation.”
The former Director General of the Lagos Chamber of Commerce and Industry noted with grave concerns that the state of insecurity has reached a frightening level deserving of a state of emergency declaration.
“The omens are very bad. The bandits and terrorists are becoming more daring, bolder and audacious. They operate with a baffling impunity. This trajectory portends serious adverse implications for economic growth prospects and investment outcomes. We cannot retain, scale or attract investment in an environment that is not secure. This is true of domestic and foreign investments.”
“When investment is in jeopardy, livelihoods are negatively impacted. Worsening insecurity is adversely impacting lives and undermining livelihoods. This is taking a huge toll on both the social and economic life of the nation
“
All hope not lost
Although Nigeria has wasted a substantial share of its golden era, there are vast opportunities for exploiting the demographic dividends that the youth cohort can offer.
To start with, Rewane recommended that the nation’s youth population must be prepared for the labour market. He explained that this requires prioritising education and skill development.
He added that while expanding access to secondary and tertiary education as well as skill acquisition is required to create opportunities for the youth population, there is also the need to enhance the capabilities of the teeming youth population to make the right decision for seizing opportunities through better access to credit, access to information, and development of well-functioning markets.
Furthermore, he said, Nigeria would need to embark on addressing the legacy constraints that undermine industrial development. It must tackle energy poverty as over 50 percent of Nigerians do not have access to the national grid.
Yusuf claims that the power sector reform has not delivered the desired outcomes as citizens’ expectations were not met.
He, however, called on the government to ensure the rapid promotion of renewable energy solutions through the enactment of policies that will make it more affordable.
He noted that the current high cost of acquiring renewable energy installation has been a major impediment to the access of this energy solution. For instance, the cost of solar panels and batteries are very prohibitive.
“We submit that import duty and taxes on solar equipment, solar batteries and inverters should be scrapped to improve access to renewable energy solutions. The implementation of the energy mix programme of the government needs to be accelerated,” Yusuf said.
Like Rewane, Yusuf argued that the power sector is critical to the economic development of the country.
“We are sometimes faced with a conflict between development objectives and commercial objectives. I believe the government still needs to provide generous fiscal incentives for investors in the sector because of the economic development and social impact of an improved power sector performance.”
Also, the focus on subsistence agriculture which has dominated Nigeria’s Agricultural sector policy needs to change. It must focus on commercial and mechanised farming. The pace of industrial transition must be more than doubled while keying into the fourth industrial revolution – the era of digital economy. The government and policy makers must rethink the fight against insecurity from the viewpoint of creating economic opportunities rather than purely military combat. The time to begin to harvest the golden era is now and we must act now or never. Indeed, Nigeria still has a second chance.
