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Tackling Nigeria’s Unemployment Crisis

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  • Tackling Nigeria’s Unemployment Crisis

The increasing rate of unemployment continues to be a source of concern for the country. The effect of the high level of joblessness has been seen in the upsurge in crime and other social vices, such as youth restiveness in almost every part of Nigeria.

Statistics

The unemployment report recently released by the National Bureau of Statistics shows that no fewer than 5.5 million Nigerians became unemployed in the two years of the President Muhammadu Buhari administration. The unemployment rate rose to 14.2 per cent in the fourth quarter of 2016, from 13.9 per cent in the preceding quarter. Besides, a recent nationwide survey conducted by BudgIT showed that Kogi, Benue, Bayelsa, Abia, Ondo, Oyo, Ekiti and 14 other states owed their workers and retirees salaries and pensions ranging from one to 36 months.

According to the latest report released by the NBS, the unemployment rate is 4.2 per cent higher than the rate recorded in the fourth quarter of 2015. Consequently, 61.6 per cent of Nigerians in the labour force (not the entire population), aged between 15 and 24, were either unemployed or underemployed in Q4 2016, compared to 59.9 per cent in Q3, 58.3 per cent in Q2, 56.1 per cent in Q1, and 53.5 per cent in Q4 2015.

The statistical agency also said the population of the unemployed rose from 11.19 million at the end of the third quarter of 2016 to 11.55 million in the fourth quarter of 2016.

Concern

The country’s rising unemployment rate, especially among the youth, is now a major source of worry for all stakeholders. The World Economic Forum and the Lagos Business School say the country sits on a “time bomb”.

The Nigeria Economic Transformation Map co-curated by the Lagos Business School show that the high rate of unemployment “can be attributed to many factors such as high dependence on oil revenue and limited diversification of the economy.”

Similarly, the Brookings Institution, a non-profit public policy organisation based in Washington, in a report titled, “Youth Unemployment in Nigeria: A Situation Analysis,” noted that several factors might be blamed for the prevalence of youth unemployment in Nigeria. According to the report, the country has a high population growth rate—3.5 per cent per annum—which accompanies its already large national population.

In addition, deficient school curricula and poor teacher training were listed as contributors to the failure of educational institutions to provide their students the appropriate skills to make them employable.

The Brookings Institution’s report said, “Since schools in rural areas are generally more deficient in infrastructure, teaching facilities and teacher quality than schools in urban areas, this may help account for the high growth in rural unemployed youth.

“In fact, some experts suggest that the major jump in rural youth unemployment could be due to the mass failure in national examinations conducted among final-year secondary school students in 2010, which made many of them unemployable in 2011.”

Entrepreneurship Development

To address the worrisome employment situation, experts have stressed the need for youth empowerment and entrepreneurship development as Nigeria’s best option for wealth creation and economic growth.

Focus on SMEs

Executive Director, North, Fidelity Bank, Mr. Mohammed Balarabe, said supporting Small and Medium-sized Enterprises would bring about economic empowerment and employment opportunities for a lot of youths in the country. Balarabe said the continuing slide in the price of crude oil was a clear warning that it was no longer business as usual for Nigeria.

“It is against this background that I believe that fundamentally the Nigerian economy is going to change and for businesses to succeed going forward, they have to be ingenious and they have to come up with new ideas as to how to engage the environment to be able to success,” he said. “With the drop in crude oil, demand for consumer goods would change, government spending pattern and even that of corporates would also change. Thus, SMEs must change the way they seek to do business.”

Managing Director, Borodo and Co. Nigeria Limited, Alhaji Bashir Borodo, urged governments in the country to initiate friendly policies that will encourage SMEs. He called for development of the transport system across the country to ease the means of doing business.

“We need the support of our government. That is the only way we can move. One key issue for us is railway. Without good railways, production would be very expensive. So, our government must support SMEs,” Borodo, a former president of Manufacturers Association of Nigeria, stressed.

Chief Executive Officer of Fidelity Bank, Mr. Nnamdi Okonkwo, described SMEs as critical agents for economic development in any nation. Okonkwo said Fidelity Bank had designed structures that would support SMEs in the country and make them profitable.

According to him, “SMEs account for about 80 per cent of businesses. There are over 40,000 micro, small and medium scale enterprises employing over 60 million people in Nigeria.

“That was why as a bank, in the past three years, we have continued to increase our focus on SMEs. We have a special unit that focuses on the challenges faced by SMEs in the country and we support them by a multi-faceted approach. One of them is capacity building.”

Fidelity Bank’s Entrepreneurship Drive

In line with its drive to promote entrepreneurship, Fidelity Bank Plc has been empowering Nigeria youths with skills needed to thrive in today’s highly competitive business landscape. The bank recently entered into a partnership with Empretec Nigerian Foundation to organise a graduate entrepreneurship programme in Calabar, the Cross Rivers State capital, where over 200 youths were trained in the theoretical and practical aspects of entrepreneurship.

Wife of former Governor of Cross River State and founder of Empretec, Onari Duke, and the state Commissioner for Commerce and Industry, Peter Egba, inaugurated the programme.

A flagship capacity-building programme of the United Nations Conference on Trade and Development (UNCTAD), Empretec is dedicated to promoting entrepreneurship and micro, small and medium scale enterprises (MSMEs) with a view to facilitating sustainable development and inclusive growth.

The bank has also collaborated with Gazelle (Vocational Centre) Academy to introduce a national youth empowerment initiative. The empowerment programme, which is part of the bank’s Corporate Social Responsibility (CSR) initiatives, is primarily targeted at creating a new breed of entrepreneurs among Nigeria’s youth population.

Dubbed the Fidelity Youth Empowerment Academy (YEA), the programme was designed strategically to drive awareness as well as empower undergraduates with requisite entrepreneurial skills that will not only help them establish sustainable businesses but also eventually turn them into bg employers of labour.

In a similar vein, last month, the bank, in collaboration with the Federal Polytechnic, Oko, venture, concluded an entrepreneurship training programme for 400 students in Anambra State. Organised under the YEA stream 3, the week-long training programme was aimed at equipping the students with skills and capabilities needed to start businesses even while in school.

Some of the skill areas participants were trained in included fashion, accessories, cocktail, tailoring, makeup, shoe making, and digital marketing.

Speaking at the closing ceremony of the third edition of the Fidelity Youth Empowerment Academy held in Anambra State, Okonkwo noted that the initiative sought to empower the polytechnic community by creating thriving business owners among students.

He explained that this was in furtherance of the financial institution’s quest to not only tackle the country’s unemployment challenges but also improve the wellbeing of communities where it does business.

In the same vein, the founder, Gazelle Academy, Muna Onuzo, noted that entrepreneurship remained the most viable solution to the current economic challenges. He encouraged the students to use the platform to gain financial freedom and self-reliance.

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Businessinsider, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

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African Economy Set for Steady Growth: 4% Projected for 2025

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Nigerian Breweries - Investors King

Experts are forecasting a robust growth trajectory of 4% for the continent in 2025.

This optimistic projection was highlighted during the ongoing Afreximbank annual meetings, incorporating the Africaribbean Trade and Investment Forum, held recently in Nassau, The Bahamas.

Yemi Kale, Group Chief Economist and Managing Director of Research and International Cooperation at Afreximbank, presented the 2024 African Trade Report and Economic Outlook, saying the African Continental Free Trade Area (AfCFTA) is significant in driving economic integration and growth.

The projected growth rate of 4% for 2025 reflects a steady recovery path for Africa, building on the expected 3.5% growth anticipated for 2024.

This positive outlook comes at a crucial time when African economies are navigating challenges posed by global economic dynamics, including inflationary pressures and supply chain disruptions.

Kale underscored the resilience of intra-African trade, which expanded by 3.2% in 2023 despite a 6.3% overall contraction in Africa’s trade volumes.

This resilience is a testament to the AfCFTA’s potential to bolster regional trade ties and reduce dependency on external markets.

The Afreximbank report also delved into macroeconomic environments, trade patterns, and sovereign debt sustainability dynamics, providing policymakers and business leaders with actionable insights to navigate complexities in global markets effectively.

Nomusa Dube-Ncube, Premier of Kwazulu-Natal, highlighted Africa’s modest share of global GDP and manufacturing output, emphasizing the untapped potential within intra-African trade.

She noted that while Africa currently accounts for only 3% of world trade, intra-regional trade is steadily increasing, indicating a growing economic ecosystem within the continent.

Pamela Coke-Hamilton, Executive Director of the International Trade Centre (ITC), echoed the sentiment, advocating for enhanced trade between Africa and the Caribbean.

The ITC projects trade in goods and services between these regions to reach $1 billion by 2028, underscoring the mutually beneficial opportunities for economic expansion.

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Nigeria Sees 95% Surge in Food Imports Despite Emergency on Food Production

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Nigeria’s food import bill has surged to a five-year high in the first quarter of 2024, despite the federal government declaring a state of emergency on food production.

Data from the National Bureau of Statistics (NBS) reveals a 95.28 percent increase in food imports to N920.54 billion from January to March, compared to N471.39 billion in the same period last year.

This alarming rise comes amid soaring food inflation, which hit a record 40.5 percent in April, reflecting a 15.92 percent year-on-year increase.

The sharp inflation has left many Nigerians struggling to afford a balanced diet, exacerbating the food security crisis in Africa’s most populous nation.

In March, President Bola Ahmed Tinubu emphasized the government’s commitment to self-sufficiency in food production, stating that Nigeria would not rely on imports to stabilize prices.

“We will not allow the importation of food but rather turn the lack in the country into abundance,” Tinubu declared. However, the latest import figures suggest that this goal remains elusive.

The NBS Foreign Trade Statistics report highlights that the value of food imports via maritime, air, and land routes surged 29.4 percent from N711.4 billion in the fourth quarter of 2023.

Major agricultural goods imported included durum wheat from Canada and Lithuania, valued at N130.26 billion and N98.63 billion, respectively. Frozen blue whitings from the Netherlands accounted for N16.67 billion.

Wheat imports alone constituted N519.75 billion of the total food import bill. The average cost of wheat imports, a significant driver of the food import value, increased by 33 percent compared to the previous quarter’s value of N391.01 billion.

The rising importation of wheat reflects its popularity among Nigerian consumers amid skyrocketing prices of close substitutes like garri and rice.

Overall, Nigeria’s total imports for Q1 2024 amounted to N12.64 trillion, representing a 39.65 percent increase from N9.05 trillion in Q4 2023 and a 95.53 percent rise from N6.47 trillion in Q1 2023. Food imports accounted for 7.3 percent of total imports during the period under review.

The bulk of Nigeria’s imports came from Asia, China, Europe, America, and Africa. Mineral fuels topped the import category with N4.44 trillion, representing 35.09 percent of total imports.

Machinery and transport equipment followed with N3.17 trillion, contributing 25.08 percent, and chemicals and related products at N1.79 trillion, making up 14.13 percent of total imports.

Despite the federal government’s initiatives to boost local food production and reduce dependency on imports, the latest data underscores the persistent challenges facing Nigeria’s agricultural sector.

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Ethiopia Boosts Spending by 21%, Eyes IMF Program for Economic Relief

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Ethiopia has announced a 21% increase in its 2025 budget, marking the first budget since defaulting on a Eurobond payment and committing to economic reform discussions with the International Monetary Fund (IMF).

The nation’s Finance Minister, Ahmed Shide, revealed the new budget details to lawmakers on Tuesday, outlining plans to spend 971.2 billion birr ($16.9 billion) in the fiscal year starting July 2024.

The increased budget reflects Ethiopia’s commitment to addressing its economic challenges head-on. Despite the heightened expenditure, the fiscal deficit is projected to remain stable at 2.1% of gross domestic product (GDP), unchanged from the current fiscal year.

Financing the Deficit

Minister Shide outlined a plan to cover the 358.5 billion-birr deficit through a combination of local and foreign borrowing.

The domestic borrowing component will be managed via government treasury bills and medium-term bonds. Shide emphasized that until substantial external donor support is secured, Ethiopia will continue to rely heavily on its domestic markets to finance budget deficits.

“While the government has secured some external financing from the World Bank and the European Union, negotiating an IMF program will be crucial to alleviate pressure on local banks and secure overall debt relief,” said Giulia Filocca, a senior analyst at Standard & Poor’s for sovereign and international public finance ratings.

IMF Program and Economic Reforms

An agreement with the IMF is seen as a pivotal step for Ethiopia. The nation failed to remit a $33 million coupon payment for its $1 billion bond in December 2023, leading to agreements with some creditors, including the Paris Club, to suspend debt repayments.

In exchange, Ethiopia is expected to reach a staff-level agreement with the IMF, which will likely include economic reforms such as devaluing the birr currency.

“Our expectation is that an IMF program will be signed this year, but the timeline remains unclear due to ongoing political developments and challenges over foreign-exchange reforms,” added Filocca.

Budget Highlights

The new budget includes 451.3 billion birr for recurrent spending, 283.2 billion birr for capital expenditure, and 236.7 billion birr allocated for regional subsidies.

The government projects income of 612.7 billion birr, with tax revenue expected to contribute 502 billion birr and non-tax income 61.6 billion birr. Sector budget support is anticipated to bring in 7.3 billion birr, with aid and grants expected to add 41.8 billion birr.

Economic Outlook

Ethiopia’s economy is forecasted to expand by 8.4% in the coming fiscal year, up from an expected 7.9% growth rate in the current period. The budget increase is designed to support this growth trajectory by enhancing public investment and stimulating economic activity.

“Our partnership with the IMF and other international financial institutions will be key to ensuring Ethiopia’s economic resilience and sustainable growth,” Minister Shide concluded. “We are committed to implementing the necessary reforms to secure a brighter economic future for our country.”

As Ethiopia navigates its economic challenges, the government’s proactive approach to increasing spending and engaging with the IMF reflects a strategic effort to restore fiscal stability and drive long-term economic development.

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