That millions of Nigerians lost their jobs last year should come as no surprise to anybody with or without a basic understanding of economics. Virtually in every corner of Nigeria, businesses have closed down, companies down-sized their staff, abandoned projects formerly designed for expansion are forced into liquidation by banks and other creditors.
The sectors most hard-hit are banking, construction and manufacturing. Banks were forced to offload thousands of workers due to the implementation of the Treasury Single Account (TSA) by the Federal Government, which removed government funds from bank vaults into a dedicated account with the Central Bank of Nigeria (CBN). This hampered the ability of banks to give loans to industries, which also led to massive lay-offs, especially as governments found it difficult to continue financing ongoing capital projects.
These are the unwanted harvests of an economy in recession. The National Bureau of Statistics (NBS) announced last year that the economy slid into recession in the second quarter. That meant that aggregate demand for goods and services dropped significantly; so did incomes.
What is startling about the recent announcement is the unexpected number of people who lost their jobs. In any country – China, India, USA or Japan – 3.67 million people losing their jobs in one year would be regarded as very serious. For Nigeria, it is a major catastrophe whose impacts we are already experiencing. Not doing anything urgently will only make the situation worse.
To begin with, 3.67 million represents close to six per cent of those employed. By any global standard, that is a major decline capable of provoking destructive social consequences. Kidnapping, armed robbery and advance fee fraud are all on the increase on account of a swollen population of people with nothing more to lose than gamble with their lives and that of others’. The situation is made more threatening when we realise that Nigeria has one of the largest dependency ratios worldwide.
Dependency ratio is defined as the number of individuals depending on a person employed.
In Nigeria, it is between four and five. So, in addition to the 3.67 million directly affected, as many as 15 million could be at risk.
It is important that government creates emergency policies that would lead to mass employment, especially of the youth. With more and more people turning to agriculture, efforts must also be made to expand its value chains to take in more people.
The long talked-about idea of devolution of government to give more powers to the states and local governments will reduce the cost of governance and give more impetus for private sector to create jobs and involve more people in productive ventures.
Time to start tackling the problem is now.