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Job Losses Force Focus on Entrepreneurship, Industrialisation

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Over four million Nigerians lost their jobs last year, according to the National Bureau of Statistics (NBS). The unemployment rate rose at an all-time high of 18.8 percent in the third quarter of 2017, with NBS projecting that the figure might get worse. The grim statistics, which underscored the economy’s vulnerability despite exiting the recession, may have prompted renewed focus on entrepreneurship, industrialisation and stronger public-private sector collaboration this year. 

Grim statistics abound to challenge economic managers working with the private sector to halt the unemployment rate in the country.

The National Bureau of Statistics (NBS) brought the reality of the crisis in the labour market nearer home when it said that in nine months, last January to September, 4.07 million Nigerians lost their jobs.

The Bureau, in its unemployment report for third quarter of last year, said the number of Nigerians that became unemployed rose from 11.92 million in the first quarter of last year to 13.58 million and 15.99 million in the second and third quarters.

It said between the second and the third quarters, the number of economically active or working age population (15-64) increased from 110.3 million to 111.1 million.

It said the population of Nigeria’s labour force increased from 83.9 million in second quarter 2017 to 85.1 million in third quarter, while the total number of people in full-time employment (at least 40 hours weekly) declined from 52.7 million in second quarter to 51.1 million in third quarter.

The Bureau added that unemployment rate increased from 14.2 per cent in fourth quarter 2016 to 16.2 per cent in the second quarter and 18.8 per cent in third quarter.

The NBS report further said the number of people within the labour force who are unemployed or underemployed increased from 13.6 million and 17.7 million in the second quarter, to 15.9 million and 18 million in third quarter.

According to it, the total unemployment and underemployment combined increased from 37.2 per cent in the previous quarter to 40 per cent in third quarter.

The Bureau, among other disturbing revelations, emphasised that the increasing unemployment and underemployment rates implied that though the economy was out of recession, the domestic labour market was still fragile.

NBS added that growths in the past two quarters of last year had also not been strong enough to provide employment in Nigeria’s domestic labour market.

Though disconcerting, the unemployment figures churned out by the NBS only confirmed what not a few Nigerians and operators in various sectors already knew: Nigeria’s unemployment crisis has reached frightening dimension.

The situation, they noted, requires more efforts by various tiers of the government, private sector operators, development partners, unemployed Nigerians and other critical stakeholders to stem the tide this New Year.

Even before the NBS report, which jolted Nigerians and also put the administration on the spot with regards to promise in job creation, experts in the employment space had consistently canvassed increased support for entrepreneurship, particularly for Small and Medium Enterprises (SMEs).

They also argue that there is no better time than now to put more steam into the drive for industrialisation.

The United Nations Industrial Development Organisation (UNIDO) Regional Office, Nigeria, is one of those that has long pushed this position by calling on both the Federal and State Governments to increase their support for entrepreneurship and industrial development, noting that this could be done by putting in place more business –friendly policies and incentives.

The Officer in Charge, UNIDO Regional Office, Nigeria, Dr. Chuma Ezedinma, did not mince words when he noted: “Entrepreneurship and industrialisation are two important ingredients for stimulating economic growth, job creation and poverty reduction in both developed economies and economies in transition including Nigeria.”

Ezedinma, who spoke at a UNIDO Stakeholders’ Workshop in Abuja, also said increased support for SMEs could help tame the unemployment monster.

“Successful SMEs are the primary engines for job creation, income growth, and poverty reduction. Small businesses broaden the base of participation in society, create jobs, decentralise economic power, and give people a stake in the future.”

He said the government could encourage entrepreneurship and small businesses through its tax policy (corporate tax rate reductions, tax credits for investment and tax holidays).

Others are regulatory policy (simpler regulatory processes and reducing the cost of compliance with government regulations), access to capital (here the proposed development commercial banks can be of assistance), and the legal protection of property rights.

UNIDO has been at the forefront of promoting Inclusive and Sustainable Industrial Development (ISID) in Nigeria and globally. It has never hidden its intention to support and partner the government and private sector in order to achieve this.

But, going by the NBS latest unemployment statistics, the government and private sector appear to have failed to work with the Organisation to enable Nigerians benefit maximally from UNIDO’s global expertise in the area of entrepreneurship and industrial development.

However, a new dawn may be in the offing for unemployed Nigerians this year as job creation appears to engage the attention of government and the private sector.

Worried by the fragility of the domestic labour market, despite the economy’s exit from recession, members of the Organised Private Sector (OPS) have urged the Federal Government to adopt measures to create jobs this year.

The OPS in its reaction to the 18.8 per cent unemployment rate, noted that many employers, including the public sector, found it difficult to pay workers as and when due.

The OPS said this had necessitated the need for measures that would impact on citizens’ welfare, especially lower food prices, reduced cost of healthcare, improved transportation system, constant power supply and security of lives and property.

Noting that Nigeria’s unemployment rate was one of the highest in the world, Lagos Chamber of Commerce and Industry (LCCI) Director-General, Mr. Muda Yusuf, said increased support for SMEs and business start-ups through capacity building and funding would help.

He identified lack of finance, inadequate infrastructural facilities, shortage of skilled manpower, poor entrepreneurial skills and lack of enabling operating environment, among others, as some of the challenges holding SMEs down. He, therefore, said there was the need to address these challenges to unleash SMEs’ potential.

According to Yusuf, SMEs boast huge potential for employment generation and wealth creation, if adequately encouraged. He said by helping to create more jobs, SMEs reduce unemployment and its associated high crime rate.

Indeed, the rising spate of unemployment, particularly among the youths, according to the experts, was responsible for the various vices plaguing the country. They include political instability, civil unrest, rising crime wave (kidnapping, robbery, cultism, prostitution, advanced fee fraud, otherwise called ‘419’) and reduced wages, among others.

To curtail the rising crime wave across the country, experts have called on the government to fast-track its diversification strategy as encapsulated in the Economic Recovery and Growth Plan (ERGP) by supporting growth in income enhancing and job creating sectors, such as SMEs, mining and agriculture.

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

Crude Oil

Oil Dips Below $62 in New York Though Banks Say Rally Can Extend

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Oil

Oil Dips Below $62 in New York Though Banks Say Rally Can Extend

Oil retreated from an earlier rally with investment banks and traders predicting the market can go significantly higher in the months to come.

Futures in New York pared much of an earlier increase to $63 a barrel as the dollar climbed and equities slipped. Bank of America said prices could reach $70 at some point this year, while Socar Trading SA sees global benchmark Brent hitting $80 a barrel before the end of the year as the glut of inventories built up during the Covid-19 pandemic is drained by the summer.

The loss of oil output after the big freeze in the U.S. should help the market firm as much of the world emerges from lockdowns, according to Trafigura Group. Inventory data due later Tuesday from the American Petroleum Institute and more from the Energy Department on Wednesday will shed more light on how the Texas freeze disrupted U.S. oil supply last week.

Oil has surged this year after Saudi Arabia pledged to unilaterally cut 1 million barrels a day in February and March, with Goldman Sachs Group Inc. predicting the rally will accelerate as demand outpaces global supply. Russia and Riyadh, however, will next week once again head into an OPEC+ meeting with differing opinions about adding more crude to the market.

“The freeze in the U.S. has proved supportive as production was cut,” said Hans van Cleef, senior energy economist at ABN Amro. “We still expect that Russia will push for a significant rise in production,” which could soon weigh on prices, he said.

PRICES

  • West Texas Intermediate for April fell 27 cents to $61.43 a barrel at 9:20 a.m. New York time
  • Brent for April settlement fell 8 cents to $65.16

Brent’s prompt timespread firmed in a bullish backwardation structure to the widest in more than a year. The gap rose above $1 a barrel on Tuesday before easing to 87 cents. That compares with 25 cents at the start of the month.

JPMorgan Chase & Co. and oil trader Vitol Group shot down talk of a new oil supercycle, though they said a lack of supply response will keep prices for crude prices firm in the short term.

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Crude Oil

Oil Prices Rise With Storm-hit U.S. Output Set for Slow Return

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Crude oil

Oil Prices Rise With Storm-hit U.S. Output Set for Slow Return

Oil prices rose on Monday as the slow return of U.S. crude output cut by frigid conditions served as a reminder of the tight supply situation, just as demand recovers from the depths of the COVID-19 pandemic.

Brent crude was up $1.38, or 2.2%, at $64.29 per barrel. West Texas Intermediate gained $1.38, or 2.33%, to trade at $60.62 per barrel.

Abnormally cold weather in Texas and the Plains states forced the shutdown of up to 4 million barrels per day (bpd) of crude production along with 21 billion cubic feet of natural gas output, analysts estimated.

Shale oil producers in the region could take at least two weeks to restart the more than 2 million barrels per day (bpd) of crude output affected, sources said, as frozen pipes and power supply interruptions slow their recovery.

“With three-quarters of fracking crews standing down, the likelihood of a fast resumption is low,” ANZ Research said in a note.

For the first time since November, U.S. drilling companies cut the number of oil rigs operating due to the cold and snow enveloping Texas, New Mexico and other energy-producing centres.

OPEC+ oil producers are set to meet on March 4, with sources saying the group is likely to ease curbs on supply after April given a recovery in prices, although any increase in output will likely be modest given lingering uncertainty over the pandemic.

“Saudi Arabia is eager to pursue yet higher prices in order to cover its social break-even expenses at around $80 a barrel while Russia is strongly focused on unwinding current cuts and getting back to normal production,” said SEB chief commodity analyst Bjarne Schieldrop.

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Crude Oil

Crude Oil Rose Above $65 Per Barrel as US Production Drop Due to Texas Weather

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oil

Crude Oil Rose Above $65 Per Barrel as US Production Drop Due to Texas Weather

Oil prices rose to $65.47 per barrel on Thursday as crude oil production dropped in the US due to frigid Texas weather.

The unusual weather has left millions in the dark and forced oil producers to shut down production. According to reports, at least the winter blast has claimed 24 lives.

Brent crude oil gained $2 to $65.47 on Thursday morning before pulling back to $64.62 per barrel around 11:00 am Nigerian time.

U.S. West Texas Intermediate (WTI) crude rose 2.3 percent to settle at $61.74 per barrel.

“This has just sent us to the next level,” said Bob Yawger, director of energy futures at Mizuho in New York. “Crude oil WTI will probably max out somewhere pretty close to $65.65, refinery utilization rate will probably slide to somewhere around 76%,” Yawger said.

However, the report that Saudi Arabia plans to increase production in the coming months weighed on crude oil as it can be seen in the chart below.

Prince Abdulaziz bin Salman, Saudi Arabian Energy Minister, warned that it was too early to declare victory against the COVID-19 virus and that oil producers must remain “extremely cautious”.

“We are in a much better place than we were a year ago, but I must warn, once again, against complacency. The uncertainty is very high, and we have to be extremely cautious,” he told an energy industry event.

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