Martins Hile, Editor, Financial Nigeria magazine
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- Social Development
Nigeria needs industries with and without smokestacks 18 Feb 2019
Youth in Nigeria are treated as cannon fodder by politicians. They are underrepresented in governance and excluded from critical decision-making processes. Winning the next election is a greater imperative for politicians than the urgent intervention needed to address the unprecedented youth employment challenge in the country.
The rate of unemployment among Nigerians between the ages of 15-34, according to the National Bureau of Statistics (NBS), was 29.7% in the third quarter of 2018. This is higher than the unemployment rate of 23.1% across the entire working population. What is more, the national statistics agency said, "Young people are more likely to face difficulties securing full time employment and are more likely to be completely idle or take up part-time, leisure, voluntary, or otherwise menial work."
Coincidentally, a different report released by the NBS last month shows the highest levels of drug abuse in the past one year were found among those aged 25-39 years. While there are various health, social and economic factors that contribute to substance abuse, a typical high risk drug user was someone who was either underemployed or unemployed in the six-month period prior to when the survey was conducted.
The National Survey on Drug Use in Nigeria – which was published in partnership with Federal Ministry of Health, Centre for Research and Information on Substance Abuse (CRISA) and the United Nations Office on Drugs and Crime (UNODC) – shows drug abuse is a serious public health problem in the country. The Minister of State for Health, Dr Osagie Ehanire, said the findings were striking and alarming.
Left unattended, the jobs crisis that young people are facing will undermine Nigeria's ability to harness the youth demographic dividend. And rather than become a potential instrument of economic development, the youth bulge could actually become a potent threat to national stability. But this challenge is not peculiar to Nigeria. A 2011 survey by the World Bank showed that about 40% of those who joined rebel movements across Africa said they did so because they were jobless.
A new report, published by Africa Growth Initiative (AGI) at Brookings Institution, says Nigeria and Africa's youth unemployment crisis is not insoluble. Titled "Foresight Africa: Top Priorities for the Continent in 2019," the report offers policy options for undertaking reforms and interventions for the African continent.
In the section on "Harnessing Africa's Youth Dividend: A New Approach for Large-Scale Job Creation," Senior Fellow at AGI, John Page, said the key to solving the employment problem is to develop effective strategies for structural change that will provide jobs across industries with and without smokestacks. Historically, much of the structural changes in the labour market of developed and developing countries in Asia have been led by the manufacturing sector, which made it possible for workers to move from lower to higher productivity employment and increase their standard of living.
According to African Development Bank, the African formal sector is only able to create 3.1 million jobs each year. This constricted formal sector cannot absorb the 10 to 12 million youth who enter the workforce. Those who are left out have to take up part-time jobs, other informal sector jobs or smallholder farming. Policymakers have to, therefore, consider a different paradigm for large-scale job creation to address the unemployment problem.
Since industrialization has not taken place in Africa, the manufacturing sector – or industries with smokestacks – alone cannot be the solution to the high unemployment rate on the continent where there are 200 million people aged between 15 and 24 – the largest population of young people in the world.
Indeed, Page says Africa's share of manufacturing in GDP is less than half of the average for all developing countries. Moreover, the continent's share of global manufacturing is much smaller than it was in 1980.
Whilst interventionist supply-side policies to reduce unemployment, such as education and training to address the skills gap in the market, are important, they will be ineffective if a complementary demand-side approach is not considered. This alternative approach will require promoting "industries without smokestacks" to address long-term unemployment. Some of the growth sectors of the African economy with capacity to provide large-scale jobs include tourism and agribusiness.
One of Nigeria's successful young agropreneurs – entrepreneurs in the agriculture sector – is Adeshola Ladoja, the CEO of both Real Livestock Limited and Simply Green Limited. Ladoja expects his dairy farm to achieve 30,000 litres of milk per day by 2022. His Simply Green Juices provides organic cold-pressed juices, which promote healthy living through organic products.
The young entrepreneur is already a big player in the bourgeoning agrobusiness sector that is expected to promote food security, reduce food importation and drive the diversification of Nigeria's economy. At almost 30%, the Nigerian agriculture sector's contribution to GDP in Q3 of 2018 was the highest of all the economic sectors. In a new Nigerian economy, the food industry is projected to become a multi-billion-dollar industry.
The Brookings report shows that high-value agricultural exports account for an increasing share of Africa's overall exports, with Ethiopia, Ghana, Senegal, and South Africa, having succeeded in breaking into global value chains (GVCs) in horticulture. Meanwhile, in Tanzania and Ethiopia, tourism accounts for approximately 14% and 11.3% of GDP, respectively, and 3.2% and 9.8% of employment, respectively.
There is also the Information and communications technology (ICT) sector from where many Nigerians and other African youth are already earning foreign exchange. All it requires is policy intervention to boost connectivity, which will enhance productivity growth and scale.
To achieve Nigeria's youth demographic dividend, policies should be designed to promote the growth of these sectors due to the enhanced productivity and job opportunities they are likely to offer. Part of the policy priorities of the Nigerian government must include providing alternative means of finance to scale access to credit for entrepreneurs and facilitating trade to promote the export potential of smokestack-less industries.