Take Urgent Steps to Halt Worsening Unemployment Situation, FG Warned

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Obinna Chima

The federal government has been advised to develop appropriate policies to tackle the current state of unemployment in the country.

A report by Guaranty Trust Bank Plc which gave the warning in a presentation obtained by THISDAY tuesday, warned that unemployment which currently is at 13.3 per cent may worsen if urgent steps are not taken by the government to arrest closure of manufacturing plants and address foreign exchange (FX) challenges in the country.

Also, the report predicted that the consumer price index, which is used to measure inflation in the country may climb further from its current rate of 18.3 per cent as at October 2016, to a band of 20-30 per cent.

The bank also held the view that recession may linger if the “federal government maintains current approach to the economy,” just as he anticipated another round naira devaluation next, if oil price does not rebound and the country’s crude oil output remains low.

It put the daily loss in crude oil output suffered by the country as a result of the activities of the Niger Delta militants at 400,000barrel; with average crude oil price at $42.5pbl; revenue loss in dollars at $17.4million/day and $6.2billion/annum.

Commenting on the leadership style of President Muhammadu Buhari, the report stressed that: “Integrity is not enough, capacity is equally as important, if not, more important. You can’t give what you don’t have.”
While the integrity of the president was put at 90 per cent, his capacity was rated 20 per cent.

The report showed the significant rise in the cost of retail and consumable products this year as a result of the inflation. It also showed the level of depreciation suffered by the nation’s currency.

For instance, the official rate of the naira which was N168/$ in 2014, fell to N197/$ in 2015 and N305/$ presently. Similarly, on the BDC segment, the naira which was N190/$ in 2014, slipped to N203/$ a year later (2015), and presently is trading at N385/$. Also, on the parallel FX market, the naira which was N199/$ as at 2014, dipped to N264 at the end of 2015 and currently at N485 to the dollar.

In the same vein, the report reflected the level of decline also suffered by the Nigerian Stock Exchange market indicators. The market capitalization and All-share index which were at N9.85 trillion and 28,642 basis points as at 2015 respectively, stood at N8.76 trillion and 25,461 basis points as at November 2016.

It listed some of the survival strategies adopted by Nigerians to overcome the pains of the economic recession to include the elimination of luxuries, diversification of their income streams, increased savings, multiple/part time jobs, return to school, staying close to recruiting agencies, innovative thinking, search for government jobs as well as staking funds in Ponzi schemes, which he warned against.

Nigeria’s third quarter real gross domestic product (GDP) growth had shown that the country sank deeper into recession, contracting by 2.26 per cent from -2.06 per cent in the second quarter of this year, and -0.36 per cent in the first quarter.

This represented a 0.18 per cent drop from the growth recorded in the preceding quarter and lower by 5.08 per cent relative to the corresponding quarter in 2015.

The contraction in GDP was largely driven by the militancy in the Niger Delta, which resulted in a drop in oil output during the third quarter to 1.63 million barrels per day (mbpd) and the oil sector’s contribution to GDP, notwithstanding the rebound recorded in the agriculture sector.