Nigeria has a large population, estimated as high as 198 million by the CBN in 2017, and largely untapped human capital. The latest labour force report from the National Bureau of Statistics shows a rise in the national unemployment rate to 23.1% in Q3 2018 from 22.7% recorded in the previous quarter.
The recent International Labour Organisation (ILO) forecast of the sub-Saharan African unemployment rate is 7.2% for both 2018 and 2019. This implies that Nigeria’s unemployment rate is already significantly higher than average.
- The bureau recently released an extended version of its report. This shows that Rivers State had the highest unemployment rate at 29.0% in Q3 2018 and Osun State the lowest rate at 10.1%.
- The population size for each state is a major element of the extended labour force statistics. Osun’s population is estimated at 3.4 million and that of Rivers at 5.2 million.
- Meanwhile, Lagos State (the country’s commercial hub) had an unemployment rate of 14.6%. The state government has made a positive response in the form of job placements through the Lagos State Employment Trust Fund (LSETF).
Unemployment rate (%)
Sources: NBS, FBNQuest Capital Research
- Given that the poor education system and lack of skill acquisition training centres have also contributed to the high unemployment rate, the LSETF has created 90,000 jobs across the state through its vocational training initiative as well as its entrepreneurship programme targeted at micro, small and medium-sized enterprises.
- Although this is laudable, when we consider the country’s choppy business terrain, start-ups find it difficult to thrive and so business sustainability is an issue.
- In our view, until structural challenges in the broader economy are addressed, there is a high risk that roles created on the back of entrepreneurship programmes will have low job security.