Unemployment Crisis Looms in Nigeria, Analysts Warn

Obinna Chima

Analysts have warned against an impending unemployment crisis in Nigeria.

The Chief Executive Officer, Financial Derivatives Company Limited (FDC), Mr. Bismarck Rewane, who gave the warning in a presentation at the Lagos Business School’s executive breakfast meeting for June yesterday warned of a “a looming unemployment crisis in Nigeria.”
According to Rewane, the FDC think-tank estimated that fourth quarter unemployment figures would spike to 21.5 per cent.

About 4.07 million Nigerians were unemployed between January and September last year, the National Bureau of Statistics (NBS) had revealed. The bureau, in the report had stated that the number of Nigerians that became unemployed rose from 11.92 million in the first quarter of last year to 13.58 million and 15.99 million in the second and third quarters of 2017 respectively.

But Rewane revealed that the NBS shelved the release of the fourth quarter 2017 unemployment data earlier scheduled for June 5.
The report estimated a population growth of 3.2 per cent for the country.

Also, a former Executive Director of the Asset Management Corporation of Nigeria (AMCON), Mr. Kola Ayeye, pointed out that population growth in Nigeria presently above three per cent and a substantial number of the country’s population living below poverty line, should be of concern to policy makers in the country.

Nigeria recorded a Gross Domestic Product (GDP) growth rate of 1.95 per cent in the first quarter of 2018, down by -0.16 per cent from the 2.11 per cent recorded in the fourth quarter of 2017.

“The kind of growth rate we should be celebrating should be close to two digits. So, that should give you an indication of how far we are from where we ought to be.

“Where per capita income in less than $2,500 and where a substantial part of the population is still living below poverty line and the population growth rate is more than three per cent,” Ayeye, who is presently the Group Managing Director of Growth and Development Limited (GDL), said.

Continuing, the FDC report showed that the federation account allocation shared by the three tiers of government reached a four-year high of N701 billion in May.

It also showed that a new exchange rate of N325/$1 has been adopted for the conversion of oil proceeds
Meanwhile, the FDC in its latest monthly economic bulletin pointed out that any shock to crude oil price or production might hurt the Nigerian economy.

“In Nigeria’s case, the primary reason for the improvement in the balance of trade was higher oil prices and production.
“Thus, it follows that any shock to price or production would have a significant impact on fiscal revenue and foreign exchange.

“Oil prices are expected to stay strong in the short-term supported by geo-political tensions and supply concerns. This will keep exports firm in the second and third quarters,” it explained.

Nigeria’s exports for the full year 2018 were projected at $61.3 billion, a 33.84 per cent increase from the 2017 levels.
On the flip side, it noted that higher oil prices would mean increased landing costs of refined petroleum products. This will push up Nigeria’s import bill.

Additionally, it stated that the increased availability of forex would continue to support import demand in the country.
“The effect of these will, however, be partially dampened by the expected decline in the global prices of agricultural imports such as sugar.

“Imports are expected to be a total of $45.2 billion in 2018, 38.22 per cent higher than 2017,” it added.

Nigeria’s total exports rose by 20.02 per cent to N4.69 trillion ($15.37 billion) in first quarter 2018.
“Higher trade surplus is positive for exchange rate, terms of trade and current account balance.

“Increased inflow is also the reason for the 19.2 per cent accretion in the external reserves recorded in the first quarter, giving the Central Bank of Nigeria (CBN) more room to support the currency,” it added.