As the most populated African country, Nigeria’s human capital is largely untapped. The high population is often viewed as a double-edged sword, with the negative implications getting more of the attention. Given that rural jobs are predominantly in agriculture and are often seasonal, attention tends to focus on unemployment in urban areas, particularly white-collar (and tax-paying) positions in the formal economy. Commercial agriculture and manufacturing are generally thought to have the highest potential for rapid job creation.
The impact of the several government initiatives to boost job creation is being blunted by the massive growth in the labour force. Although lagged, the latest labour force report from the NBS shows a rise in the national unemployment rate to 23.1% in Q3 2018 from 22.7% recorded in the previous quarter. It was the fifteenth successive quarter of acceleration. Chris Ngige, the reappointed federal minister for labour and productivity, disclosed that the country’s unemployment rate is likely to hit 33.5% in 2020.
Entrepreneurship has been flagged as a solution to the steady rise in unemployment. Several developing nations have identified small and medium scale enterprises (SMEs) as engines for job creation. The CBN defines SMEs as companies with asset bases between N5m and N500m (US$1.4m), and staff strength ranging from 20 to 300 employees. SMEs account for over 50% of Nigeria’s GDP. However, a large proportion of these firms appear unattractive to jobseekers due to the salary packages on offer as well as low job security. For the latter, despite the fact that the country’s business climate has improved, structural issues still exist, making it difficult for some businesses to break even. Labour cuts are usually a short-term solution.
It is not enough to have just human resources with no training of relevant skills or a poorly educated population. Human capacity development has been neglected over the past several years in Nigeria. Human capital depends heavily on both education and health. Vacancies across specific sectors of the economy are linked to the absence of skilled labour. Aside from the inadequate facilities, a restructuring of curricula to reflect Nigeria’s current economic needs is essential.
Most institutions that offer courses geared towards technology-inclined disciplines are yet to adopt new techniques such as robotics or modules best suited for the fourth industrial revolution. To boost employability, the authorities need to invest in human capital development, starting with the revamp of the basic education system. We understand the FGN has allocated N557bn for statutory transfers in the 2020 national budget, of which 20% will be used to fund the Universal Basic Education Commission.
As for capital expenses, the education sector is expected to receive N48bn (2% of total capital expenses) next year. Given the dilapidated state of schools across the country, this allocation would have a minimal impact with regards to the delivery of capital projects. The FGN has allocated N490bn for recurrent expenses in the education sector. Perhaps a financial intervention fund geared towards upgrading school infrastructure across the three education levels, similar to the CBN’s power infrastructure fund, would assist with achieving the much needed facelift the sector requires.
State governments also need to consider identifying their respective competitive advantages and use this information to promote formal skill acquisition training (linked to their competitive advantage) across different local governments within their states. By educating the locals as well as equipping them with new skills, this will boost employability and ease pressure on the unemployment rate.
The essence of fully functional vocational and technical institutions cannot be overemphasized. Perhaps, polytechnics across the country could be revamped to offer courses that will equip individuals for career paths often cited as “blue collar” and usually captured in the informal sector. For instance, formal education in plumbing, electrical techniques, auto mechanics and carpentry amongst others is likely to offer a decent standard of living for the enrolled candidate post-graduation. Often times, these professions are regarded as inferior but generate appreciable income for several individuals in developed countries.
An advanced developing country which has invested heavily in education to stimulate its economy and increase competitiveness is Singapore. Singapore has refocused on lifelong learning as a means of developing skills through continuing education and training. Ultimately, this should stimulate employment and encourage innovation in learning technologies.
The Chinese government has in recent years recognized the importance of human capital investment, leading to a substantial increase in investments in education, health care, student nutrition and early childhood development. For China, education is not heavily focused on the formal white-collar inclined disciplines; rather, training for informal jobs and skills acquisition have been the core focus. China has even gone as far as generating export earnings from its human capital. For instance, construction projects delivered in other countries are predominantly handled by Chinese nationals.
A replication is not the advised prescription. Rather, Nigeria has to identify areas in which there are competitive advantages and invest in its human capital through training or formal education. The government should not bear the burden alone; private sector partnerships, both foreign and domestic, can also serve as core drivers. However, workable and profitable training development plans need to be created to lure foreign investors.
Chinwe Egwim is a renowned Economist. She has notable practical experience in producing policy relevant economic research reports which cover fiscal profile, fx dynamics, interest rate, GDP growth trends, reserves management, inflation and sectorial trends (including power, transport, technology, agriculture, solid minerals and manufacturing) among others. She has over 500 economic publications under her belt. Chinwe is a member of the Board Committee on Research of the Nigerian Economic Summit Group (NESG). She is also the National Focal Point of a UN Economic Commission Development Project on Services Trade across Africa.