The World Bank says Nigeria is the country with the highest rates of self-employment and unpaid family employment on a global scale.
It says Nigeria ranks at par with several sub-Sahara African (SSA) nations.
The World Bank Africa’s Pulse report highlights the concerning impact of this ranking, including decreased worker productivity and limited earnings, even for skilled workers.
Underscoring the pressing need for job creation un the SSA region, where only one in six workers holds a wage job, in stark contrast to high income countries where one in two workers enjoys the security of wage employment.
The report also identifies several factors contributing to this trend, including unpredictable employment opportunities, under-utilization of skills, lack of adequate equipment and challenging working conditions. These elements collectively contribute to low job quality reflected in the prevalence of involuntary self-employment and the informal job sector.
Recent labour statistics from August emphasize Nigeria’s status as a ‘hustle economy,’ with a substantial majority of jobs falling within the unorganized sector. According to data from the National Bureau of Statistics (NBS), most Nigerians are self-employed, while wage employment is held by a significant smaller segment of the population.
In the fourth quarter of 2022 and the Q1, the NBS reports that 73.1% and 75.4% of employed Nigerians, respectively, worked in their own businesses or engaged in farming activities as their primary source of incomes. Notably, the proportion of employed Nigerians in wage positions within their primary occupations decreased from 13.4% to 11.8%.
The World Bank report authors also attribute this trend to a shortage of capital that hinders the structural changes needed to create high-quality jobs. They note a lack of labour-intensive manufacturing sectors in Africa, with improved agricultural productivity primarily driving service sector growth in urban areas. The situation leads to poor labour productivity and insufficient investments in labour-complementing capital.
Nigeria, as Africa’s largest economy, has faced two recessions in the past seven years due to factors such as declining oil prices, pandemic-related disruptions and the government’s challenges in implementing economic reforms. These factors have hampered the growth of key job-creating sectors, including agriculture, industry and trade.
The NBS reports a decline in trade from 8.62% to 5,08% manufacturing from 3.35% to 2.45% and agricultural sector growth slowing from 2.13% to 1.88% in 2021.
High inflationary pressures have pushed millions of Nigerians into poverty. The headline inflation rate reached an 18-year high of 25.80% in August according to the NBS data.
In 2018, the NBS reported that 133 million Nigerians lived in multidimensional poverty, and 82.9 million were considered poor by national standards in 2019.
This economic uncertainty, the reports notes, has led to a significant brain drain as unemployed Nigerians seek opportunities overseas, impacting the quality of labour force in Africa’s most developed economy.
The British government reported issuing visas to 40,875 Nigerian students and professionals in the health and care fields within a single year.
Additionally, data from Immigration, Refugees and Citizenship Canada showed 10,180 Nigerian immigrants arriving in Canada in the first half of 2023, compared to 10,106 during the same period in 2022.
The Bank urges African policy makers to formulate inclusive growth strategies aimed at creating steady and productive jobs, particularly for the more than 10 million youth entering the workforce per year, while present growth patterns generate only three million formal positions annually, leaving a vast gap to be filled.
The Bank therefore recommends creating an environment that fosters firm entry, stability, and expansion, as well as talent development aligned with market needs. Key pillars of such a strategy include fiscal stabilization and debt reduction, political stability, and a stronger institutional framework to support markets and demand for driven-skills along with improved organizational transformation of work, the report advises.
