The National Security and Civil Defence Corps (NSCDC) advertised for 10,000 job vacancies. But 2.5million youth, the population of a small country applied for the job. This underscored the unemployment crisis Nigeria is facing today.
The major problem with Nigeria is the lack of reliable statistics. The government itself knows there is a full-blown job crisis; the reason why it allowed most of its agencies to carry out secret recruitments.
But that is just scratching the surface of the problem. The crisis will not just go away with such haphazard arrangements.
The tragedy here is that even with the economic team, made up of very sound economists, the government is just doing the opposite.
When I make a post like this, people accuse me of not providing a solution. Virtually all my posts provided a way out for the government to follow.
I am not claiming to be better than those members of the economic team. They are accomplished economists in their own right. I believe they know the solution, except if they are shy of telling the government the truth or they are hamstrung to make their findings public.
Economics is a science. The laws have not changed. Every economist can have his or her own views but it is almost the same path.
Never forget that an outdoor elevator was not invented by an engineer. The person that created Boeing Corporation was a carpenter, not an engineer or aviator.
Here are possible ways the government can address unemployment:
The goal of all job creation strategies is to stimulate healthy economic growth. Economists agree that annual growth between 2 and 3 percent is sustainable. It will create 150,000 jobs per month needed to employ new workers entering the labor force.
In a free-market economy, the government needs not to do anything when growth is healthy. Capitalism encourages small businesses to compete, thereby creating better ways to meet consumers’ needs. Because of this, small businesses account for 65 percent of all new jobs created.
The proper role of government is to provide a supportive environment for growth.
Now is the Nigerian government supporting SMEs? The answer is no. It failed to create conditions for SMEs to access loans. It creates strangulating policies that kill companies. Multiple taxations are one of them. There are administrative bottlenecks in getting approvals to do various kinds of businesses.
Approach NIPOST about registration of a courier company and the money they will demand will make you run away. Try registering for a clearing and forwarding company and you have to start with CAC and then customs registration. In the end, a person with start-up capital may have to reconsider. But on top of all problem is lack of electricity supply.
The government has tools to manipulate and put an economy on the path of growth. Fiscal and monetary policies are what every government uses. But do we see the Nigerian government manipulating interest rates for the benefit of the economy?
CBN is mostly concerned with the exchange rate and it does it in a corrupt way that even a healthy economy will collapse under the criminality CBN is committing.
Nigeria has more than four exchange rates. Interbank has its rate, BDC have their rates, importers have another rate. Travelers and students have their rates. And the mother of all rates is rate created for patronage.
Favored people are given money at a lower rate for the purpose of aiding them to make instant billion in profits. How can Nigeria ever grow?
1 – Reduce Interest Rates
The action increases liquidity, thereby giving banks more money to lend. As a result, mortgage and other interest rates decline. With cheaper credit, consumers can borrow and spend more, allowing businesses to expand to meet the increased demand. Companies hire more workers, whose incomes rise, allowing them to shop even more.
Ask even CBN Nigeria’s interest rates and the answer will be official and unofficial. The unofficial rate is the problem.
Nigerians never know of uniform interests that are fixed. A politician gets loans at negotiated interest for the money he has no intention to pay. All the bad debts that killed banks are for consumption.
Meanwhile, a start-up company can never get loans to buy a common generator.
2 – Spend on Public Works
When the government creates public work it may have to employ people to do the job. Nigeria is not doing much of it and when it does the Chinese bring their workers to do even menial jobs. There is no conscious government work aimed at providing employment. Something is missing in the thinking of our leaders and their advisers.
The state governments are also not taking a cue from the federal government. Since they control an integral part of the components that make Nigeria a country, any program without their participation will not work. To force them into this needs legislation.
The most cost-effective ones are building roads, bridges, and other public works. For instance, a job like Second Niger Bridge should at least create 20,000 jobs. Any job worth $1bn should create that quantum of employment. Ibadan-Lagos express, Kano-Abuja road and many of their likes should create jobs. But we can’t get it when we just appoint a contractor without forcing him to employ some agreed number of people. We are not getting this right.
3 – Spend on Unemployment Benefits
When you target unemployed people and give them money, they will spend the money to buy goods and services that keep the production of those goods going. When the government gives out 100bn unemployment benefits, it will create at least 10,000 jobs. The money will be spent inside the economy. The government will get the money back by taxing producers. It can even tax spending.
Unemployment benefits create so many jobs because the unemployed must spend all the benefits received. They buy necessities such as groceries, clothing, and housing right away. Retailers and manufacturers respond to the added demand by hiring more workers to keep up.
4 – Cut business taxes with conditions companies hire new workers
Tax cuts create jobs by letting families or businesses keep more of the money they earn. The idea is that consumers will buy more things, thereby stimulating demand. Businesses use tax cut money to hire much-needed workers.
What do we have in Nigeria? Exactly the opposite. The FG imposed VAT and wants to increase it. States created STDL and want to increase it. LGs create their own tax and shut down businesses. Criminals create their own tax with the backing of renegade government officials. The result is what we are seeing. Businesses can’t do the hiring, instead, they fire workers and die.
I hope government will look at this and make adjustments.
By Aliyu Nuhu