The unemployment rate is the percentage of the labour force that is unemployed but is actively seeking employment. According to the multinational consulting firm KPMG, Nigeria’s unemployment rate will likely hit 40.6% based on its 2023 projections. Another way to put it is, out of every five employable Nigerians between 15 and 64 years, two would be unemployed.
This would make Nigeria one of the countries with the highest unemployment rates globally.
[Highest unemployment rates 2021 / Statista]
How did we get here?
If you look at the screenshot above, Nigeria doesn’t feature in the top twenty. The explanation is that the Nigerian Bureau of Statistics (NBS), which releases official unemployment figures, has not done so since Q4 of 2020. As of then, Nigeria’s unemployment rate was an alarming 33.3 per cent.
KPMG’s report estimated that Nigeria’s unemployment rate rose to 37.7% in 2022. It expects it to rise even higher to 40.6% in 2023 based on their projections. Here’s what they said:
“Unemployment is expected to continue to be a major challenge in 2023 due to the limited investment by the private sector, low industrialisation and slower than required economic growth and consequently the inability of the economy to absorb the 4-5 million new entrants into the Nigerian job market every year.
“Although the NBS recorded an increase in the national unemployment rate from 23.1 per cent in 2018 to 33.3 per cent in 2020, we estimate that this rate has increased to 37.7 per cent in 2022 and will rise further to 40.6 per cent in 2023.”
KPMG said the coming administration would face weak and slow economic growth and trouble in the forex market. Inflation also affected Nigeria badly in 2022, maintaining an upward trend that has spilled over into 2023. Nigeria’s inflation rate in February rose to 21.91 per cent despite the Central Bank hiking the interest rate.
“Additionally, government revenue remains inadequate to support much-needed expenditure, leading to a high debt stock and high debt service payments”, the report said.
Is there any hope at all?
KPMG said that Nigeria’s growth would be affected negatively in 2023 by Meffy’s disastrous naira redesign policy, the proposed subsidy removal and the budget deficit.
However, if Nigeria addresses security issues, KPMG expects some recovery in telecommunications, trade and the oil sector. The growth rate for 2023 is projected to be at a “relatively slow pace” of three per cent.
What can the incoming government do?
Every solution to arrest Nigeria’s economic decline feels like a bitter pill. We recently added an $800 million loan to our mounting debt. Let’s not forget the coming census projected to cost ₦869 billion. It should be apparent that a serious government would look to cut down on these high expenses.
There are also security concerns that, if left unattended, might worsen an already bad situation. A 40.6 per cent unemployment rate is a ticking time bomb as this means there are too many idle hands for the devil to employ.
Unemployment is a lagging indicator. This means it’s an indicator that changes after the economic variable with which it is correlated changes. If Nigeria has a poor economic outlook, unemployment will keep rising, while if it’s growing, unemployment will fall.
Therefore, the obvious solution is to get Nigeria’s economy to grow again. This could be by supporting the manufacturing sector, making Nigeria more attractive to investors, unifying our exchange rate and providing incentives to encourage local production. These things don’t happen overnight; it will take collective political will to turn things around. But as the saying goes, where there’s a will, there’s a way.
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