The world stood astonished at the sight of over 2 million youths applying for no less than a couple of thousand jobs in the Nigeria Immigration service. The process clearly wanted to give all Nigerians the opportunity to vie for the jobs and avoid the tribalistic undertones that marred the previous recruitment attempts by Mrs Rose Uzoma (NIS’s former Controller General). That the current Controller General, the minister or indeed the federal government is being blamed for the deaths of applicants is misplaced. Nobody could foresee the sheer number of people packing out national stadiums across the country. It only takes one person to start a stampede and things will very quickly snowball out of control.
What does concern me though, is the disjointed micro thought process to a clearly gapping problem.
Nigeria has been a country on a very good growth trajectory since 2000. Its GDP per year has been growing at 6-7% a year, its debt (though climbing since 2010) has substantially fallen from the levels it was at in 1999, Its banking and telecommunications industry has become ever more sophisticated, its agricultural base is experiencing a renaissance, inflation is growing at under 8% a year, it Gross National Income has risen significantly in 14 years and its Foreign direct investment is one of the largest in Africa. However “as Nigeria gets richer, more Nigerians live in poverty”! The World Bank in its report entitled Nigeria Economic Report 2013 (now referred to as “the 2013 world bank report”), asserted that unemployment worsened from 12% of the working population in 2006 to 24% of the working population in 2011.
A number of factors are coming together to cause a perfect storm. There is a massive ongoing population explosion taking place in Nigeria. Nigeria, despite getting richer over the last 14 years, is unable to get rich at the required rate to keep up with the teaming youths entering into the job market on a yearly basis. Secondly, the work processes in today’s world is becoming more automated. The big growth drivers of the Nigerian economy (namely the Oil and Gas, Telecommunications and the Banking Industry) have pretty much hired as many people as they have capacity for. The companies within those industries also have to be alive to the commercial realities that an inefficiently run with excess labour equals higher costs of operation, lower profits and increased susceptibility to outside competition. Agriculture, it seems is an area that can absorb a huge number of our teeming unemployed youth. However, even that sector would be hard pressed to make a significant dent in the number of youths currently seeking work.
The government (federal, state and Local) are hardly better placed. The recently proposed budget of the federal government revealed that the recurrent expenditure made up 74% of the budget. 40% of Nigeria’s Federal budget was being taken up by federal government workers. The Nigerian bureaucracy is already too large and cumbersome. Most of the states of the country have not proved viable. They can barely pay the salaries of their workers. Their ability to absorb the unemployed is therefore limited.
There are also regional and zonal disparities to poverty. The 2013 World Bank report broke down the incidence of poverty by zones. It said the poverty rates are 59% for the North East, 58% for the North West, 48% for North Central, 30% for the South West, 39% for the South East and 37% for the South South respectively. Interestingly, it said that Lagos State managed to reduce poverty from 43% in 2004 to 22% in 2009 (page 9 of the report). The question then is, to what extent are the various state and federal governments to blame for chronic unemployment that translates into high poverty rates.
Nigerian state (both federal and state governments) should be aware that they cannot provide employment for its teeming population. It therefore needs to devise a workable strategy geared towards large scale employment of these youths.
There needs to be built a vigorous entrepreneurial culture amongst our youth. Nigeria is a huge market with a lot of people. The government should devise a holistic policy approach that combines the ministry of education, finance, trade and industry, internal affairs and the CBN. The first part of the policy needs to be a renewed focus in universities towards encouraging under graduates to start seeing the world of self employment as a viable alternative. The cultural change needs to start there.
The CBN would thereafter need to start to work on the banks and devise strategy that makes it economically advantageous for banks to provide small business loans to well thought out business ventures of our youth. The cost of borrowing in Nigeria is too high. It needs to be significantly reduced into the low single digits. If ever a policy of subsidy is required in any sector of the economy, it would be to subsidize start up businesses of the young and brilliant than to subsidize consumption of kerosene or gas. After all, a wise man borrows for the purpose of investment and foolish man borrows for the purposes of consumption.
The finance minister appears to be confused. The ministry of finance is borrowing too much from domestic sources. The federal government is acting as a sponge by absorbing, almost single handedly, the borrowing capacity within the domestic market. The federal government will have to streamline itself to ensure that it is efficiently staffed in a streamlined manner and avoids borrowing to pay salaries for workers. It should not hire people it cannot afford to pay. The money available within the domestic lending economy should be reserved for borrowers that would be critical for the long term job creation within the economy and wealth creation within the economy. A culture of small business start up, is the future. The government must now ensure that the cash is left for these productive persons to access at affordable rates of borrowing. If it means giving significant tax write off’s to banks that reach a certain percentage of small business loans to our graduates then so be it.
The federal and state governments should work together to make it easier and cheaper for small businesses to set up. It may require the waiving of tax liability to any newly set up small business for the first 1-5 years of its existence. It should also look at reducing the start up costs that new businesses may incur by setting up a very streamlined process that will require minimal legal costs or expenses for new businesses.
The federal government in conjunction with state governments, have to continue to make Nigeria and the respective states within it a business friendly atmosphere for foreign direct investment (“FDI”). Big and small companies setting up shop in Nigeria will also help shore up the domestic economy and help reduce unemployment. From all accounts, the rate of FDI is at a very high level at the present time.
Federal government must (through the ministry of internal affairs) come down very hard on the importers. Especially those that import goods that directly compete with companies that hire our nationals within Nigeria. Allowing cheap imports to flood into Nigeria kills domestic factories and kills jobs.
The muted policy to aid the growth Innoson motors is an example of a wise approach. The policy should be devised to allow in such a way that allows risk takers within the domestic economy to rise and thrive. However, such a policy should avoid creating monopolistic environments that prevents domestic competitors from entering into the market to compete. The cement industry needs to be encouraged to allow domestically based (not foreign) competition to also take hold.
The federal government should allow any state government that wants to repair state, federal or local roads to do so. It should avoid constituting itself into a bottleneck that would impede or restrict infrastructural development within Nigeria. Infrastructural connectivity between states will aid Nigeria to become a truly integrated market. At the moment, it is not. The lack of interconnectivity is acting as a restriction to economic growth being spread throughout the country. At the moment, the massive GDP growth within Nigeria is being powered by specific areas only.
The two choices for Nigeria is for the wealth to grow at rates that exceeds population growth or for population growth to grow at rates that are less than the GDP growth of the economy. It is safe to say, that in the short to medium term, the Nigerian economy cannot outgrow the growth in population. The government will have to look at addressing head on the controversial need to reduce population growth in the medium term to allow the economy to catch up. If that means restricting births per couple at 2 or 3 children in the short term, then that may have to be a brave measure that needs to be taken.
The future facing Nigeria is both promising and frightening. How it handles the issues it faces will determine whether it fragments into small pieces or it becomes a major super power in the medium term. My concern is that the policy makers have failed to take a holistic approach to issues of concern. Canceling the recruitment process and giving jobs to relatives of the dead are indicators of a shallow thought process that too often pervades the corridors of power. Fortune has always favoured the brave. It will make no exception for Nigeria.