COVID-19: Rising Unemployment Rate in Nigeria

• COVID-19: Rising Unemployment Rate in Nigeria

It is no longer news that the COVID-19 pandemic has negatively impacted Nigeria’s labour market and eroded recent economic gains.

According to the International Monetary Fund, Nigeria’s economy could contract as much as 3.4 percent in 2020 while the Minister of Finance, Budget and National Planning, Mrs Zainab Ahmed, had said without a well-structured stimulus package, the nation would plunge into an economic recession this year.

Earlier this month, Access Bank announced it was letting go 75 percent of its workforce to better manage the impact of COVID-19 pandemic on the organization and stay afloat. This was after Arik and other airlines cut April’s salaries by 80 percent and compelled all staff to go on compulsory leave starting from May 1st.

Hadi Siriki, the Minister of Aviation, during a COVID-19 briefing in Abuja a few days ago, said the aviation sector is losing about N17 billion per month, saying many of the domestic airlines would not make it out of COVID-19 pandemic without government’s support.

The nation’s unemployment rate stood at 23.1 percent or 20.9 million with youths’ underemployment/unemployment rate current at 55.4 percent in a nation with the largest youth population in Africa and one of the largest in the world.

The rising unemployment rate amid zero new job creation highlighted Nigeria’s precarious situation, especially when the nation’s weak foreign reserves, inability to sell crude oil, rising capital flight and expected high layoffs are factored in.

Experts have said the Central Bank of Nigeria needs to lower interest rates to stimulate economic growth and compel deposit money banks to further increase credit facility to the private sector or rather increase loan to deposit ratio from 65 percent to 70 percent.

However, the effectiveness of that method is uncertain given the recent reports that several businesses are holding off on loan applications due to the disruption in global supply chain and the recent Naira devaluation. The central bank had devalued the Naira to protect the foreign reserves and curb excessive capital outflow by foreign investors liquidating their investments in Nigeria.

Therefore, except the Federal Government lowered interest rate and aggressively stimulate the economy across key sectors, the unemployment rate will jump above 30 percent as more companies will layoff regardless of government position.