Company shutdowns deepen youth unemployment

The departure of numerous multinational corporations from the country due to the challenging operating environment has raised concerns about the potential exacerbation of youth unemployment, HENRY FALAIYE writes

Nigeria, Africa’s most populous country, boasts a youthful demographic, with nearly 70 per cent of its population under the age of 30. This demographic advantage is often seen as a potential driver of economic expansion. Yet, the actual circumstances reveal a more complex and challenging reality.

In recent years, Nigeria’s economic indicators have suggested a cautiously optimistic outlook, with data indicating a drop in the unemployment rate and fuelling discussions of economic progress.

However, a deeper investigation uncovers a troubling contradiction: a significant portion of Nigerian youths remain unemployed, and lack requisite skills.

This phenomenon, despite the reported fall in joblessness, is a cause for deep concern, signalling a crisis that could have long-lasting effects on the country’s socio-economic fabric.

Despite recent reports indicating a decline in the country’s unemployment rate from 33.3 per cent in 2021 to 32.5 per cent in 2023, the number of young people who are neither working, studying, nor undergoing training has continued to rise.

The Manufacturing Association of Nigeria reported that 767 manufacturing companies shut down and 335 experienced distress in 2023 due to various economic difficulties, including rising inflation, exchange rate volatility, and a worsening investment climate.

According to an economist and former Director of Research and Advocacy at the Lagos Chamber of Commerce and Industry in Nigeria, Dr Vincent Nwani, the exodus of multinationals from the Nigerian economy has cost the country a N94tn loss of output in five years.

Nwani said, “If things continue this way and I don’t see anything being done to cause insecurity to stop, illegal taxation, corruption, and uncertainty of foreign exchange rendering companies unable to hedge risk, then I see at least 10 more notable names (of multinationals) that will go. We already have five by the end of May.”

Meanwhile, the youth unemployment dilemma stems from several underlying issues. Firstly, a decreasing unemployment rate does not equate to a surge in job opportunities. Instead, it often signals a drop in the number of individuals actively seeking employment, either because of discouragement or a move into informal, underpaid work that is not captured by official statistics.

The underemployment rate, which measures people working less than 40 hours a week or in jobs below their skill level, has remained high, indicating that many youths are stuck in unstable employment that offers little security or prospects for advancement.

According to the National Bureau of Statistics’ ‘Nigeria Labour Force Survey Q2 2023’, in Q2 2023, Nigeria’s labour force participation rate among the working-age population was 80.4 per cent, with an employment-to-population ratio of 77.1 per cent.

It mentioned that the combined rate of unemployment and time-related underemployment stood at 15.5 per cent, while the unemployment rate was 4.2 per cent, a slight increase from 4.1 per cent in Q1 2023. Self-employment remained dominant, with 88.0 per cent of workers engaged in it, and only 12 per cent were in wage employment.

One of the primary causes is the mismatch between the education system and the labour market. Many Nigerian youths graduate from secondary schools and universities with qualifications that do not align with the demands of the modern economy.

Also, the curriculum in many institutions is outdated, focusing on theoretical knowledge rather than practical skills that are in high demand. As a result, graduates often find themselves ill-equipped for available jobs, leading to frustration and a sense of hopelessness.

Moreover, the high cost of education in Nigeria is a significant barrier for many young people. The rising cost of tuition, coupled with the economic hardships faced by many families, means that many youths are unable to afford higher education or vocational training.

The unemployment crisis is worsened by the lack of job opportunities for young people. Although Nigeria’s economy, is heavily reliant on the oil sector, it offers limited employment.

Other sectors like agriculture and manufacturing are underdeveloped, and the private sector struggles with poor infrastructure and limited credit access. As a result, many young people are left with few viable options for meaningful employment.

The lack of purpose and direction can lead to increased involvement in criminal activities, including drug abuse, armed robbery, and internet fraud, which are already prevalent in some parts of the country.

Moreover, the disillusionment and frustration among these youths can fuel political instability and violence, as they become easy targets for radicalisation and recruitment by extremist groups.

The phenomenon in Nigeria is also gendered, with young women disproportionately affected. Cultural norms and gender biases often limit the opportunities available to girls and women, particularly in rural areas.

Also, many young women are forced into early marriages or domestic responsibilities, which curtail their access to education and employment.

Experts have warned that the consequences of the growing NEET (not in education, employment, or training) population are dire. Youths who are not engaged in productive activities are more likely to experience poverty, social exclusion, and mental health issues.

Speaking with The PUNCH, a human resources consultant, Mr Tolu Adedayo, said, “As the former President Buhari Muhammadu stated, Nigeria is sitting on a keg of gunpowder. We have a high level of unemployed youth coupled with a high inflation rate, especially food inflation. It is a big problem and we have not seen a definite plan from the government to roll out an employability plan so that these youths can be absorbed and given meaningful employment.”

He stated that one of the cushioning effects would be the entertainment industry, which has engaged thousands of youths to keep them busy and that religious organisations were also providing a cushioning effect to reduce the spate of restiveness.

According to Adedayo, these are not solving the unemployment challenge, they are just cushioning their restiveness.

He explained that the macroeconomic factor regarding the number of youths is a major concern. “It is a red flag that, if not addressed, could lead to more serious consequences such as a high crime rate, fraud, and insecurity, among other things,” he stated.

He noted that though the Federal Government was trying to provide palliatives, they would not go a long way because they were just a temporary measure.

“Unfortunately, the palliatives are not even going around and even if they get to the right people, how long will they last? Which is not realistic, sustainable and effective considering the long-term effect.

“The government should just declare a state of emergency when it comes to unemployment so that all hands will be on deck. Many of our youths are quite enterprising, so the government can start supporting them with soft loans and grants to engage them and enable them to start something,” he posited.

He added that the government should roll out a comprehensive employment plan or train them with skills acquisition, which are in demand right now, like technical skills and vocational skills. A lot of graduates who have a basic foundation will require some of this training to upskill and be able to get employed and generate income.

“Many of the training and courses received from schools are no longer relevant to what the job market demands right now. At the same time, the government must rejig and review our curriculum across the board, starting from primary schools to tertiary institutions and make it contemporary to meet global best practices because Nigeria is far behind looking at the community of nations,” Adedayo remarked.

Experts have also suggested that youths could be deployed to areas like sports, agriculture, and manufacturing, where the country has strengths to make them productive and contribute to the economy.

The rising number of Nigerian youths who are not in employment, education, or training is a ticking time bomb that requires urgent and comprehensive action. Addressing this crisis will require a multi-pronged approach that involves government, the private sector, civil society, and international partners.

First and foremost, there is a need to reform the education system to make it more relevant to the needs of the labour market. This includes updating curricula, promoting vocational and technical education, and fostering stronger links between educational institutions and industries. By equipping young people with the skills required in the modern economy, they will be better prepared to secure decent jobs and contribute meaningfully to society.

Furthermore, the government must prioritise job creation, particularly in sectors that have the potential to absorb large numbers of workers, such as agriculture, manufacturing, and information technology. This will require investment in infrastructure, improving the ease of doing business, and providing incentives for private sector growth.

Additionally, expanding access to education and training for all youths, regardless of their socio-economic background, is crucial. This can be achieved through policies that reduce the cost of education, provide financial aid, and create more opportunities for vocational training and apprenticeships.

More so, it is essential to address the gender disparities that contribute to the NEET crisis. Empowering young women through education, skills development, and access to economic opportunities will not only reduce the NEET rate but also drive broader societal progress.

Also, HR Analyst Victor Oyesina, said, “Nigeria must urgently address youth unemployment by revamping its education system to focus on practical skills that match market demands. The government should aggressively promote entrepreneurship by providing easier access to funding, reducing bureaucratic hurdles, and fostering innovation hubs across the country.”

According to Oyesina, massive investment in digital infrastructure and technology-driven industries is essential to creating sustainable, high-impact jobs.

Meanwhile, he explained that establishing strong partnerships between the government, private sector, and international organisations could help scale up efforts and ensure the long-term success of those initiatives, providing a clear pathway to economic stability for the nation’s youth.

He asserted that tackling corruption and creating a business-friendly environment would attract significant investment, driving large-scale job creation for the youth.

“Tackling youth unemployment in Nigeria also demands implementing extensive public works and infrastructure projects that can quickly employ a large number of young people,” he added.

However, Oyesina mentioned that the rising youth population in Nigeria, despite a falling unemployment rate, is a clear indication that the country’s youth were being left behind in the march toward economic development.

“If left unaddressed, this crisis could have severe consequences for Nigeria’s future, threatening social cohesion, economic growth, and political stability.

“All stakeholders must come together to tackle this issue head-on, ensuring that every young Nigerian has the opportunity to build a better future for themselves and their country,” he emphasised.