Communications Minister, Omobola Johnson
By Festus Akanbi
Nigerian service sectors such as banking, non-bank financial services, telecommunications and information technology, last week, were assessed as being too insular to provide sufficient employment opportunities for Nigerians in comparison to manufacturing and the agricultural sectors of the economy.
According to a recent report from Renaissance Capital, a financial advisory and investment firm, last week, although Nigeria's economy grew at a stellar average rate of 8.8 per cent in the 10 years to 2011, concurrently, unemployment increased sharply from 13.6 to 23.9 per cent over the same period.
The implication of this development, according to Rencap, is that strong growth has not been sufficient for job creation in the formal sector.
Sectors like telecommunications, banking and non-bank financial services are regarded as critical sectors of the Nigerian economy by virtue of their contribution to GDP.
However, the reality is that unlike agriculture and the manufacturing sectors, the service sectors have not been able to provide sufficient employment opportunities to Nigerians in a manner commensurate with the sector's share of the economy.
Economic analysts observed that the recent banking sector reforms and the attendant mass sack in most of the banks should be blamed for the present poor capacity of banks to engage the unemployed. “Nigeria's jobless growth suggests to us that the sectors that have emerged in recent years and driven the country's strong growth are not job-creating.
“Just over half (54 per cent) of Nigeria's population lives below the poverty line, according to the United Nations Development Programme's Multidimensional Poverty Index. In our view, such a high incidence of poverty implies that socially inclusive or participatory economic growth is critical,” stated Rencap.
Specifically, the report noted that telecommunications, one of the major sectors of the economy has not been able to rise to the occasion as far as employment opportunities for Nigerians are concerned.
“Telecommunications is by far Nigeria's fastest-growing (services) sector, with year-on-year growth rates of over 30 per cent. However, the sector is not a significant employer, as suggested by Nigeria's National Bureau of Statistics data.”
Rencap indicated that the development should be laid at the doorsteps of service sectors, especially telecommunication and banking, which in spite of their huge share of the economy are unable to absorb a significant number of unemployed Nigerians in a manner that will bring down the unemployment figure.
Rencap, in the report, added that Nigeria's jobless growth suggests that the faster-expanding sectors are slower at creating jobs.
It noted that “although the services sector is the biggest employer in Nigeria, with half of the workforce, its share of total employment increased by only 2 percentage points between 2005 and 2010.
“Manufacturing's share of the workforce increased to 11 per cent in 2010, from 3.6 per cent in 2005, which is significantly higher than the sector's contribution to GDP (4-5 per cent).
“This implies manufacturing has a relatively higher employment elasticity of growth, and further suggests investment in the manufacturing sector may result in greater job creation than that in the services sector.”
The reality of the nation's economy, Rencap argued, “Suggests to us that as the size of Nigeria's economy has increased, the share of the workforce in gainful employment has declined, implying growing income inequality.
“We believe when growth is accompanied by rising unemployment, it may imply that the economy is experiencing structural changes. This suggests to us the expanding sectors may have low employment elasticity of growth.
“We expect the soon-to-be-released revised GDP numbers, which will be rebased to 2008 (from 1990) to confirm that the structure of the economy has undergone significant change over the past two decades.
“In our view, the change in the structure of Nigeria's economy has worsened inequality over the past decade and made it more challenging to alleviate poverty as the relationship between growth and formal employment has weakened.”