Youth Unemployment in Nigeria Challenges and Way Forward


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Youth Unemployment in Nigeria Challenges and Way Forward

  1. 1. Youth Unemployment in Nigeria – Challenges and Way Forward Akin Iwayemi Department of Economics University of Ibadan Ibadan, Nigeria Email Presented at the World Bank World Bank Regional Workshop on Youth Employment Abuja July 23 and 24, 2013 1
  2. 2. 1. Introduction and Overview • The emergence and persistence of massive youth joblessness, declining well being of majority of Nigerians despite significant endowment of human and natural resources raise three fundamental questions which this paper attempts to provide some answers. • First, what do we know and what have we learnt about the emergence and persistence of youth unemployment? • Second, what are the key challenges that confront effective and efficient solution of the evolving social, economic and security challenge? • Third, how do we transit effectively and efficiently from the current dismal situation to a more satisfactory environment characterized by an economic future most young people are gainfully employed in decent work? • The scope of this paper is defined by these questions. 2
  3. 3. 2. The Nature and Character of Youth Unemployment in Nigeria • Nigeria with a population of about 160 million people is the most populous African country and among the top six most populous countries globally. • With annual population growth rate of 2.8% the country is yet to experience the demographic transition (illustrated by significant decline in fertility rate and high dependency ratio). • Arguably, and from the perspective of our subject matter, eliminating youth unemployment is more challenging where there is no demographic transition. • Of the labour force of 67.3 million people in 2011 which was about 41% of the total population, 76.1% was gainfully employed. This however, is about 10.5% decline from 2008 figure. • In the past five years, an average 2 million people enter the job market despite the declining rate of job creation in the economy fuelling the massive joblessness in the economy. • Unskilled and semi-skilled workers dominate the structure of the labour market. 3
  4. 4. 2.The Nature and Character of Youth Unemployment in Nigeria • A striking observation is that one in four Nigerian was unemployed in 2012 compared to one in seven in 2008. • Also notable, is that unemployment is becoming more of a rural phenomenon 25.6% compared to 16.1% in urban areas. • There is not much differential in the unemployment rate by gender (24.3% female, 23.5% male). • There is a wide disparity in the unemployment rate, with the range spanning 7.5% to 39%. The highest unemployment rate is in Yobe state with 39% while Lagos state has the lowest rate of 7.5%. • All categories of educational levels below post graduate had double digit unemployment rates above 20%, (20.2% for bachelors’ degrees to 33.4% for Junior Secondary School Certificates). • Unemployed educated and young people are a growing phenomenon of the unemployment crisis • Based on age group classification, the 15-24 age group has the highest unemployment rate of 37.7%, followed by the 25-44 age group with unemployment rate of 22.4%. • These millions of poor and unemployed youth are made up of a mix of educated and poorly educated young people. 4
  5. 5. 3.Challenges in Setting the Agenda for Sustainable Youth Employment • The challenges to sustainable youth employment are multi-dimensional. They encompass economic, social, political and cultural issues which include: • Weak economic, political and social institutions • Accountability and Transparency in governance • High cost of governance reducing available resources to support job-creating opportunities for young people at federal and state levels • Political and bureaucratic corruption • Jobless economic growth. • Inadequate economic diversification based on current economic structure • Weak integration of SME’s with the rest of the industrial sector with focus on raising their productivity level 5
  6. 6. 3.Challenges in Setting the Agenda for Sustainable Youth Employment • Fiscal stimulus for job creation in the context of our fiscal history and the need to maintain a stable macroeconomic environment • High cost of finance • Reducing free riding and other opportunistic behaviour in the economy. • Pricing, demand and supply of energy and infrastructure services. • Declining education standards • Lack of demographic transition • Crime and insecurity. • Federal Constitution and the operation of federalism in job creation • Large scale and medium term interventions including grants and other financial support when governance is weak. 6
  7. 7. 4: Path to Sustainable Youth Employment in Nigeria • The following are note worthy, though not exhaustive in terms of some specific issues in the design and implementation of optimal policy strategies for promoting youth employment. • Most critical is improving the quality of institutions to support economic growth and especially job creation. • Establishment and sustenance of good institutions will reduce the high cost of economic and social transactions and enhance the ability of the economy and youth to be job creators than job seekers only. • More specifically, the radical reform of existing institutional framework for promoting youth unemployment at both state and federal levels is essential for sustainable youth employment. • Several institutions have been set up over the years to tackle youth unemployment but they have produced no significant impact on the growing economic and social malaise. • The effectiveness of the Industrial Training Fund, National Directorate of Employment, Bank of Industry, Bank of Agriculture and SMEDAN, to mention a few, in meeting their goals and objectives needs to be evaluated to make more relevant. 7
  8. 8. 4: Path to Sustainable Youth Employment in Nigeria • Security has become an important economic and political issue in both the North and Niger Delta regions. Increasing security is a sine qua non for sustainable economic growth and employment creation. The impact of insecurity on the economy of several states in the north is widely acknowledged. • Systematic reduction in the cost of governance and corruption and the use of the cost savings to support youth employment programmes • Phased elimination of fuel subsidy and the use of the cost savings to support youth employment programmes • Reduce the administrative, regulatory, economic and technical barriers to entry of the youth as entrepreneurs • Careful sequencing and implementation of investment supporting infrastructure. 8
  9. 9. 4: Path to Sustainable Youth Employment in Nigeria • Investment and development of agriculture value chain underpinned by young agropreneurs will provide substantial short term opportunities for young people. • Creating synergy between the federal and state governments in youth employment creation • Financial market developments to support innovation drives among young people and thus encourage them to be job creators than job seekers. Improving access to finance and technology acquisition are critical enablers in the promotion of sustainable youth employment strategy • Risk mitigation measures for job creators to reduce the difficult risk environment for business in the country. • Design of policy support and incentive plan to encourage and reward young people who are job creators than job seekers. 9
  10. 10. 4: Path to Sustainable Youth Employment in Nigeria • Minimize the discrepancy between what is in the budget and what is disbursed in ministries and implementing agencies concerned with the promotion of youth employment. • Revamp of the educational system to re-establish quality and standards so as to produce more appropriate human capital but also supply more job creators. The introduction of entrepreneurship centres and courses at the tertiary level is commendable. • Formulate, implement and ultimately institutionalize a national skills programme to impart skills to the active population. This could be based on state or zonal skills centres that will be jointly supported by both state and federal governments. The Technical and Vocational System has not been effective in producing the skills required to support a diversified economy that seeks to be globally competitive. • Enlarge the scope of capacity building in research and development with focus on assisting business development services while recognizing the peculiarities of both the urban and rural economy. 10
  11. 11. 4: Path to Sustainable Youth Employment in Nigeria • Accountability and proper oversight functions of the legislative houses to monitor and evaluate the effectiveness of youth employment promotion programmes and projects. • Support and sustain a robust business climate that is conducive for all economic actors, small, medium, and large scale by improving service delivery with electricity and transportation the most critical. Nigeria is a laggard in this regard globally. • Wider dissemination of information on opportunities for job creation for youth using different information platform • Undertake research to assist policy design and implementation on promoting as well as prioritize youth employment options. 11