unemployment in Nigeria

Causes and Solution to Unemployment in Nigeria

What is the causes and solution to unemployment in Nigeria is often a leading question among policy makers. The simple solution to unemployment in Nigeria is investment in skills. I will explain this in details.

The Nigeria unemployment grew from 24.2% in January 2015 to 33.3% in July 2016. The youth unemployment is currently at 58% which is on a high side. Please, if you you need empirical work on Impact of unemployment on Nigeria economic growth 1981-2015 click the link to download same.

In this article, I will share some very practical causes and solution to mass unemployment in Nigeria and the global economy.

What is unemployment in this context? Unemployment is a situation where the active population of country willing to work could not lay hold of any satisfied job.

Unemployment often leads to underemployment – a situation where an individual engages in activities far below his productive capacity.

Causes of Unemployment in Nigeria

The major causes of unemployment in Nigeria may include:

Poor education system leading to:

  • Poor knowledge of the course of study
  • Poor or no skills for available jobs
  • Poor creative and analytical skills to create jobs on their own.

Corruption in the country leading to:

  • Diversion of public funds meant for education into personal use.
  • Diverting over 50 jobs position meant for the masses into one individual account without doing the job (Ghost workers).
  • Infrastructural decay which hinders economic activities due to diversion of public funds.
  • Insincerity in the implementation employment programmes.

Neglecting the agricultural sector leading to:

  • No or high cost of agricultural input for the manufacturing sectors.
  • Low input-output demand between the leading sectors.
  • Youth lack of interest in the agricultural sectors. Because the sector is not modernized.

Poor power supply in the country leading to:

  • High operating cost of business in Nigeria. High operating cost further hinders job offers to curtails expenses.
  • Closure of many small and medium businesses leading to mass unemployment.
  • Reduction in foreign direct investment in the country which ought to increase employment.

High tax rate in the country leading to:

  • Closure of many medium and small enterprise in the country.
  • Discouraging investment in the country.
  • Reduction in aggregate investment, flow of money.
  • Reduction in economics activities and fall in employment.

All these are the major causes of unemployment in Nigeria. If these identified causes is addressed Nigeria will be sure to solve her current predicament. To understand Nigeria current economic crisis read this my post on;

Economics recession in Nigeria: Causes and Solution.

Solution to Unemployment in Nigeria

Having understand the meaning and causes of unemployment, let look at the solution to unemployment in Nigeria.

Reduction in tax rate will;

  • Encourage consumer to buy more through increase in purchasing power.
  • Producers or business owners will produce more, innovate and employ more through reduce tax.
  • The business sectors should be enabled through tax reduction and tax holidays to reduce operating costs.
  • Increase aggregate spending, consumers will be able to buy more and that will encourage job growth. If you lower taxes for businesses, they will be able to produce more, innovate more, and hire more people. It’s that simple.

Read my post on Unemployment and Inflation in Nigeria. Failure of Phillip Curve Hypothesis

Reformation of the educational system will leads:

  • Increase graduate skills and makes them more a problem solvers, creators, entrepreneurs, and innovators.
  • Students learning more of practical real life issues and problems than mere theories that are neither applicable nor relevant.
  • According to African Manager Initiatives formal education (university or college education) contributes only 10% of the skills we need to live our dreams while 70% and 20% comes from practical on job learning and feedback from peers.
  • University should not encourage job search over creativity, students should be given opportunity to go into business while still in school.
  • Everybody must not go to the university or college, people should be encourage to pursue their passion. Vocational trainings should be encouraged.
  • The business study students must show evidence of a working business they manage as criteria to graduate, same apply to agricultural students.

Reformation of the agricultural sector will lead to:

  • The increase in the sector turn over, increase its input-output coefficient.
  • Modernization of the sector, to attract the young graduates to engage in the sector.
  • Establish bumper stock to take care of surplus produce to encourage the farmers to remain in the agriculture.
  • The youth and graduates should be trained in the use of some agricultural technology to improve their produce.
  • Through irrigation agriculture sector should have multiple cropping all year round to reduce seasonal unemployment.

Investing in the industrial sector this will lead to:

  • Increase in capital formation and growth of small and medium scale industries that has the potentials to employ hundreds of thousand graduates.
  • Small and medium size firms should have access to information on managing business to prevent failure.
  • Boost the healthy competition in the sector leading to more investment and employment.
  • Partnering between the government and the private sectors to establish manufacturing plants in all the states.
  • Government should adopt policy of decentralization of the industrial sector to increase employment generation.

Investment in Infrastructural Development government should:

  • Increase its capital expenditure especially in area of transportation – building god roads networks. Subsidizing transportation cost for ease access of raw materials by the industrial sector.
  • Electricity distribution should be improved. Most business are collapsing because of high cost of business resulting from poor power supply.
  • The communication system should be improved. A better internet connection in the country will improve the presence of most business online.
  • Proper evaluation and monitoring of government spending on infrastructure will save the country from embezzlement of funds.

Recurrent Expenditure should be drastically reduced Government should:

  • Reduce its recurrent spending on salaries, allowances, and commissions. This currently take over three quarters of government spending.
  • Reduce payments made to politician. They should be paid according to their economic contribution to the nation.
  • Subsidizing education at all level will reduce the pressure on students to meet up with payments.
  • Unemployed youth should be trained on various skills acquisition. Nigerians lack skills and these is the major cause of unemployment in the country.
  • Politician should be made accountable to public funds in a transparent manner.
  • Interest rate should be drastically reduced to increase availability of funds to entrepreneurs.
  • Above all government should either creates jobs or provide enabling environment for private sectors to creates the jobs.

If the government take appropriate steps in implementing this policies Nigeria will not only solve the its problem of mass unemployment but soon Nigeria will become among the fastest growing economy in Africa.

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