Nigeria is sitting on a demographic gold mine that could transform the economy. About 60% of Nigeria’s 200 million people are under the age of 25, and that number is expected to increase significantly by 2050.
Instead of being an asset, the country’s burgeoning young population has become an albatross. It presents risks for the economy and social cohesion.
Among Nigeria’s economic challenges, youth unemployment remains the most formidable. The World Bank estimates youth unemployment in Nigeria at 17.7% in 2019 compared to 10.8% for Africa. Nigeria’s youth unemployment rate is double the national unemployment rate.
Official statistics on unemployment in Nigeria often underestimate the seriousness of the problem. For example, they do not take into account that over 80% of Nigerians with primary education or above who are considered employed are severely underemployed in low productivity informal sector work.
Activities in this sector typically consist of street vendors, petty trading, sewing, shoe repair, domestic work, roadside food sales, transportation, and subsistence farming.
The federal and state governments have introduced various measures to combat youth unemployment. These include social investment programs that encourage youth entrepreneurship and support for micro, small and medium enterprises. Others are skills development programs, direct labor for public works projects, loans for agriculture and various initiatives to stimulate entrepreneurship. Despite all these efforts, 65 million young Nigerians, or one in three, are expected to be unemployed in the next four years.
In a recent report, the World Bank proposed strategies to tackle youth unemployment in Nigeria.
One is the creation of safe and legal labor migration routes for young Nigerians to seek employment opportunities in other countries. This would contrast with the current illegal and perilous migration patterns.
The proposals are laudable, as there are serious shortages of skilled workers in some developed countries. The United States, Canada and the United Kingdom have introduced special visas to attract skilled workers from other countries. Workers in Asia, especially India, have taken advantage of these opportunities.
The World Bank proposes that destination countries seeking to fill labor shortages offer high quality, industry-specific training to potential migrants and non-immigrants in Nigeria. This, he argues, would increase the global stock of workers and contribute to a brain gain.
The responsibility should lie with the companies. Indeed, many young Nigerians lack the 21st century skills desired by global businesses.
This proposition is theoretically valid. But this poses a number of questions.
Innovation and disruptive technologies have become salient features of industrialized economies. Robotics, 3D printing, precision machining, data analysis, bioinformatics, digital imaging, design, and animation all feature prominently. Few young Nigerians have these advanced skills.
This lack of skills is not only a Nigerian problem, it is also widespread across Africa. This explains why much of the labor migration – around 80% – in Africa is intra-regional rather than international. It is mainly made up of unskilled workers.
Global companies are looking for workers with “productive capacities” that can be used in production-intensive industries, science and technology, as well as in information technology.
The World Bank’s proposal is based on the old paradigm of competition in which abundance of the workforce is a major driver of competitive advantage. But this is no longer the case, as technology, knowledge, innovation and skills have replaced work as major pillars of competition. The World Economic Forum suggests that 85 million jobs worldwide will be at risk because current job holders lack relevant skills.
Thus, attempts to tackle youth unemployment in Nigeria should focus on improving the skills and productive capacities of young Nigerians.
In addition to exploring opportunities in the global labor market, the World Bank has suggested the creation of national employment opportunities. This can be accomplished if Nigeria is able to attract employment intensive global companies.
But Nigeria is not very attractive to global value chains and foreign investors. Foreign direct investment in the country has inexorably declined from 6% of GDP in the mid-1990s to around 0.5% in 2019.
Why do global IT and pharmaceutical companies prefer to locate in India and not Nigeria? Why does Apple make iPhones and iPads in Taiwan? Why do multinational textile companies prefer Vietnam, China and the Philippines? Why has Malaysia, and not Nigeria, become a major hub for manufacturing solar equipment?
The answer is simple: their young people have a critical mass of the necessary scientific and technical skills.
Creating safe and legal channels for the migration of young Nigerians will only be effective if the following steps are taken.
First, the ongoing deindustrialization of the Nigerian economy must be reversed. Over the past four decades, there has been a steady decline in manufacturing value added in Nigeria – from over 20% of GDP in the early 1980s to less than 10% in 2019.
As a result, many young Nigerians have not had the opportunity to acquire industrial, technological and innovative skills.
Another effect of deindustrialization is that it has prevented students at Nigerian higher education institutions from applying their classroom learning in industrial settings. In a survey of companies in Nigeria, 81% said they had difficulty finding workers with the required skills. It is also a reason why global companies do not find Nigeria to be an attractive place.
The World Bank is proposing a model in which the private sector and government in destination countries would provide high-quality, industry-relevant training to potential migrants and non-immigrants in Nigeria.
This proposition is theoretically valid. But this poses a number of questions.
First, how would this training be funded? There may be political resistance from taxpayers in destination countries to fund training programs that benefit the private sector and foreign countries.
Second, private companies are often reluctant to invest in training new workers. Investing in training is expensive. In addition, it would be difficult to prevent trained workers from bringing the newly acquired skills to other companies or destination countries that do not incur the training costs.
Third, industrial and technical training is a long-term process, but companies are more interested in short-term returns on investment.
Finally, given the bureaucracy and inefficiency of the Nigerian public sector, it can be difficult to implement a training partnership between companies in destination countries and the Nigerian government.
The World Bank report also notes that Nigerians with relevant skills found their way to the United States where they thrive in various fields. This suggests that the problem of youth unemployment is more about increasing the number of young Nigerians with 21st century skills, not just creating more legal migration routes.
Nigeria’s “informal sector trap” must be resolved before promoting a route to overseas employment. Easy entry into the informal sector discourages young people from acquiring high-level skills to enable them to obtain well-paying jobs in the formal sector.
Young people are attracted to the informal sector because there are no skills required. It can be a blessing and a curse. It’s a blessing in that it easily absorbs Nigeria’s teeming population of unemployed and underemployed youth. But it is a curse because it only brings temporary relief, and young people are unwittingly discouraged from acquiring the skills that multinationals desire.
Nigeria’s outdated higher education system should be overhauled. Higher education institutions in Nigeria produce thousands of scientists, engineers and technologists every year, but many of them find themselves unemployed. Indeed, their training and education are irrelevant in the contemporary job market.
Without addressing the skills mismatch issues and lack of digital skills, young Nigerians will continue to miss out on opportunities in the global labor market.
- Onyeiwu is Andrew Wells Robertson Professor of Economics, Allegheny College