Dipo Olowookere
Prior to the COVID-19 pandemic, Nigeria’s labour market had been plagued with precarity and informality. With over 30 million youths (people aged between 15 and 29 years of age) projected to enter the labour market in 2021 (which accounts for over 53% of that age group), the COVID crisis couldn’t have hit at a worse time.
The impact of COVID-19 felt on the labour market is not without precedent for Nigeria’s young workers. At the onset of the oil recession in 2016, young people entering the labour market in Nigeria faced similar hardships.
In consequence, a significant number of young Nigeria opted – or were compelled – to abandon their schooling in favour of work. At the onset of the oil recession – much like what happened at the onset of the COVID crisis – the percentage of young people in Nigeria who entered the labour market jumped by over 12%.
While working certainly can provide short-term relief during a crisis, unfortunately, this comes to the detriment of Nigeria’s already low human capital. The human capital index (or HCI), as defined by the World Bank, aims to quantify the effects that education and health have on the productivity of the next generation of workers.
Over the last four years, Nigeria’s human capital index has remained at a steady and concerning 0.35%. To offer a comparison, this score ranks Nigeria slightly below Afghanistan which comes in at 0.4 and significantly lower than leading countries such as Singapore and Australia whose scores reach above 0.9%.
With so many young Nigerians being forced – for all intents and purposes – to forego their education in exchange for immediate economic relief in precarious low-paying jobs, the country is facing an uphill battle in terms of improving working conditions, seeing a rise in salaries and a decrease in long-term unemployment. All trends point to the fact that technology is a good career path. But entering this field – much less excelling in it – requires a certain level of education that young Nigerians are being deprived of.
This causal chain can snowball quickly as the country continues to produce a relatively underqualified workforce, the better-paying jobs will continue to go elsewhere. And while the oil and gas production career path certainly has its benefits, as the oil recession of 2016 showed us, the field is vulnerable to rapid and wild fluctuations.
Whereas receiving a quality secondary education will broaden one’s scope of work options, raise their standard of living and those around them, and give them the arms to combat against potential recessions and crises, without an education, the chances of these crises having lingering effects is increased dramatically – if not outright guaranteed.
Due, in part, to the COVID-19 crisis, economists are predicting that Nigeria is headed for its worst recession in 40 years. A staggering 20 million Nigerians are expected to fall below the poverty line in 2022.
The GDP is projected to dip, as well, which would mean a significant loss in government revenue. This, in turn, would likely lead to cuts in both education and the health care system. And the snowball gets bigger and bigger and bigger.
Despite the pessimistic projections, government officials such as Shubham Chauduri, the World Bank’s County Director for Nigeria, is quick to point out that initiatives have been put in place, and we are already seeing positive results.
In 2021, The Central Bank of Nigeria (CBN) initiated a weakening of the official exchange rate for the naira. This was done in a concerted effort to try to converge the official rate with that of the NAFEX (the Nigerian Autonomous Foreign Exchange Rate).
“We acknowledge the steps to reform exchange rates,” said Shubham Chaudhuri. “But that’s one part of it.”
Other measures that have already been implemented include the introduction of a market-based pricing policy for petrol; the reduction and potential elimination of subsidies for electricity; and the adjustment of tariffs.
The projected savings these measures would mean for the government are meant to allow Nigeria to redirect its resources toward COVID-19 response and relief. The sooner we get through the crisis, the sooner those resources can be reallocated. To where, and to what end remains to be decided.
If ever we can look at this crisis and see a silver lining it would be that the dire circumstances and woeful projections are forcing officials to take practical actions – many of which have been a long time coming.
Nigeria’s farmers are a high priority in the current wave of economic reforms. Some notable examples of initiatives that have begun to be rolled out include:
- Additional funds allocated to the research of improved crop and livestock varieties
- Additional funds released to help support the infrastructure associated with farming – this includes storage, transport, and market access.
While these initiatives are likely to yield long-term benefits, there is potentially no greater long-term return on investment than that which comes from investing in education. For the time being, however – much like in prior crises – education is being made to take a back seat.
