EL-RUFAI ON FRIDAY
Where are the Jobs? Nasir Ahmad El-Rufai By
Nasir Ahmad El-Rufai
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?
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