The already precarious unemployment situation in Nigeria is further worsened d by the impact of COVID-19 pandemic.
Critics are blaming perennial underfunding of education in the country for its worrisome job crisis which has resulted in a significant decline in both the quality of teachers and infrastructure in schools. The crisis is also compounded by frequent strike actions by public university teachers who are protesting over low wages and benefits.
The deficit in the country’s education system is highlighted by the fact that only one in four Nigerians applying to university get a spot. As jobs and economic opportunities disappear, the rich are increasingly sending their wards abroad for education in a bid to give them an edge in the labour market.
According to data from the Institute of International Education, in the US alone, the economic impact of spending by Nigerian students reached $514 million in the 2018/2019 academic year. That exceeds the economic impact of students from countries including France, Germany, and the UK in the same period.
The Buhari administration has been worse hit by the near-total shutdown of the global oil economy, given its dependence on the commodity as its biggest revenue source.
Bleak economic growth and rising unemployment are compounding Nigeria’s long-running problem with lifting citizens out of poverty. Despite sustained high oil prices in the 2010s, the country overtook India in 2018 as the country with the most people in extreme poverty.
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That was one of the key highlights of the unemployment report published by Nigeria’s Bureau of Statistics, which shows the most recent data as of the second quarter of 2020.
Unemployment rate climbed to 27.1%, up from 23.1% in the third quarter of 2018, when the unemployment report was last published. Nigeria’s underemployment rate reflects those working less than 40 hours a week, or in jobs that underutilise a person’s skills, time, or education—increased to 28.6%.
With a workforce of 80.2 million, analysts say that implies some 21.7 million Nigerians are unemployed, a figure that exceeds the population of 35 of Africa’s 54 countries. Among the age bracket of 25 and 34, the unemployment rate currently stands even higher, at 30.7%.
The unemployment rate has more than tripled since President Muhammadu Buhari first took office in May 2015. The huge informal economy service providers and producers of agricultural products for consumption of the 200 million people is affected.
The formal sectors involved in manufacturing, aviation, health and petroleum are also badly impacted. Disturbingly, there has not been engagement with the social partners, in spite of the approached by the Nigeria Labour Congress (NLC).
The organised labour proceeded to issues its own statement on COVID-19 in Nigeria and is campaigning for how workers can protect themselves and their families against the pandemic.
Since there was no tripartite or bi-partite dialogue in the country with regard to COVID-19, the Nigeria Consultative Employers Association (NECA) has launched: Guidelines on managing the COVID 19 consequences.
A platform for its members to share experiences on precautionary measures put in place in different organisations for the benefit of member companies. A letter has been sent to President Buhari on the impact of COVID-19 on businesses, job creation and industrial harmony.
In a statement, NECA requested specific interventions. Proposals elaborated by it include a temporary scheme to pay compensation to companies in the risk of laying off in order to retain jobs.
Under the scheme, the government is expected to cover 60% of the salaries of employees paid on a monthly basis with companies paying the remaining amount. It also demands support from government to negotiate, and reschedule bank loans.
NECA is equally demanding more flexible tax payment deferrals for a period of six months, upon request, with a discount on interest rates. Special focus to sectors that are worst hit, and calls on targeted and sector-specific stimulus packages in collaboration with NECA as the representative body of organised business.
On the card too is instituting payment support for employees in the public and private sector who are self-isolating and for those diagnosed with the virus.
The International Monetary Fund (IMF) Nigeria’s IMF Financial Assistance for health and jobs offered some assistance to support the health care sector, protect jobs and businesses.
Oil export which drives the country’s economy represents around 90 percent of its income. Nigeria’s oil exports are expected to fall by more than $26 billion. The economy which remains highly reliant on foreign exchange proceeds and the recycling of petro-dollars, is expected to contract by about 3.4 percent this 2020, a 6-percentage point drop compared to pre-COVID-19 projections.
With the decline in economic activity, large fiscal and external financing gaps have emerged.
Nigeria has experienced heightened risks which are mostly linked to a further collapse in oil revenue due to persistent low oil prices, and inability to sell oil because of depressed global demand, or declining production because of additional OPEC-agreed cuts.
It was expected that COVID-19 spread in Nigeria would be contained in the second half of 2020. Since that failed, economic recovery has been slower, and gaps are becoming larger. To help alleviate the impact of the COVID-19 pandemic and the sharp fall in oil prices, Nigeria requested emergency assistance of about $3.4 billion, an equivalent to 100 percent of its quota under the IMF’s RFI.
The financial support approved by the IMF Executive Board on April 28, 2020, was expected to provide critical support to shore up the country’s health care sector, and shield jobs and businesses from the shock of the COVID-19 crisis
On Monday, March 16, the Central Bank of Nigeria (CBN) announced various policy measures in response to COVID-19 outbreak. In announcing the measures, the apex bank acknowledged that COVID-19 was already having a significant adverse effect for both the global and Nigerian economies and had led to unprecedented disruption in the global supply chains.
Amongst others, COVID-19 impacted negatively on the economy leading to a reduction in crude oil prices, turmoil in global stock and financial markets, massive cancellation in sporting, entertainment and business events and travels.
CBN is supporting affected households, businesses, regulated financial institutions and other stakeholders by creating a N50 billion, about $136.6 million, targeted credit facility to support households and small and medium-sized enterprises (SMEs) that have been particularly hit by COVID-19.