Story About The Country of Nigeria

Categories: Country Unemployment Youth Empowerment

Essay, Pages 10 (2337 words)

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Many have referred to Nigeria as the Giant of Africa, among other things because of its economic prowess– and even in the case where this prowess has not been manifested into products, for its economic potential or promise. While Nigeria has the largest economy in Africa, the country has experienced very slow growth in recent years. One of the major reasons for this been the continuous increase in the youth unemployment rate in the country. Despite efforts by the Nigerian government to assuage this problem, any significant change has been slow and unsure.

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According to the World Bank, Nigeria has a population of 186 million people (2016).

The country might have the largest economy, but it has a GDP per Capita of $6,003. With all the wealth that Nigeria possesses, there is still a large inequality gap in the income distribution which has rendered part of the population to be in poverty. When there is a high rate of youth unemployment, these youths are forced to result in other means of making an income.

According to an economic report on the country, unemployment was one of the leading causes of other problems in Nigeria, such as “fraud, kidnapping, armed robbery, prostitution and terrorism” . And all of these problems are in turn causes of poor economic growth and development.

There are a lot of measures that can be taken in order to reduce the unemployment rate in Nigeria, but for the purposes of this research the focus will be on youth empowerment. Empowerment can be simply said to be the giving of power to someone else to do something.

In that respect, youth empowerment is the process by which youths are encouraged and given power to take control of their life. For Nigeria, the impact of youth empowerment can never be underestimated. Its youth–as has been said by many commentators, rightly– are the future of the country, and adequate training and mentorship for youths can result in a brighter future for both the empowered citizens as well as the country.

One of the most common and advantageous things that the empowered youths do is start their own business as a way to better their current economic condition, or in other words they become entrepreneurs. And so, it is hard to talk about youth empowerment without talking about entrepreneurship. Entrepreneurship, as a major aspect of youth empowerment, directly translates into youths taking control of their lives. And they do this by creating jobs for themselves and for others rather than waiting for job offers. However, youth empowerment does not have a single specific yardstick. When determining what variable to use to measure youth empowerment, there are a lot to consider, such as education, literacy rate, enrollment in school, etc.

For the purpose of this research, the variable that would be used to measure youth empowerment is the Starting a Business Ranking. The Starting a Business Ranking is one of the 10 factors that are considered when calculating the Ease of Doing Business conducted every year. This ranking has an important relation to youth empowerment, seeing as it takes into account the favorable conditions that allow for the creation of business which fosters entrepreneurship, a fundamental part of youth empowerment. The purpose of my research then is to determine and hence trace the correlation, if any, between unemployment and youth empowerment with the variable that will be used to measure youth empowerment being the Starting a Business Ranking.

Literature Review

Unemployment is defined by the Bureau of Labor Statistics as a situation that exists where there are people who do not have a job, have actively looked for work in the past four weeks, and are currently available for work (2018). Unemployment can be in different forms. Structural Unemployment is what happens when there is a change in the structure of an industry or economic activity in that country. Frictional Unemployment is caused by friction in the industry, whereby jobs may exist, yet workers may be unable to fill these positions because they do not have the required skills. Cyclical Unemployment is due to the operations in the business cycle.

Technological Unemployment is unemployment caused by technological changes. Residual Unemployment is unemployment that is caused by factors such as old age, physical or mental disability etc. While every economy has active and inactive populations, not those who are active are currently employed even if they are available. According to Organisation for Economic Co-operation and Development (OECD), “Economically active population comprises all persons of either sex who furnish the supply of labour for the production of economic goods and services”. And it is the inactive part of the economical population that, according to a study continues “to be the most destructive socio-economic problem preventing Nigeria’s progress”.

Because, as Fadayomi & Osinubi posit, unemployment results from the inability for effective use of the nations manpower resources. This inefficiency then causes the high rate of poverty in that country. A factor that promotes unemployment in Nigeria is a cultural one– the Get Rich Syndrome. This is when parents and youths believe that the only way to be successful and make enough money is to pursue a career in elite professions such as medicine, law, and engineering regardless of whether the youth have any interest in that field. Another factor is a structural one– the way in which the educational sector is structured in Nigeria. There is a constant problem in which new policies are not allowed to run before they are changed. One specific program was the high school certificate program. This was not successful in its first few years, and it was then cancelled.

Programs such as this are not allowed to run its full course and are suspended without proper trial. And lastly, there is a “lack of political will which is due to the fact that there is an inability for policymakers to make rational and informed decision”. The Nigerian Government is known to neglect its educational sector, which results in negligence of the future for the youths. According to Adegun & Akomolafe, Empowerment can be seen as the assistance of people who are in need, and helping them so as to overcome certain obstacles that obstruct their potential of success in future (2013). “Youth Empowerment is an attitudinal structural and cultural process whereby young people gain ability, authority, and agency to make decisions and implement changes in their lives and lives of other people” .

As regards helping they overcome obstacles the future still admits of possibilities. The paper Assessment of innovative entrepreneurship Education in Nigerian Tertiary Institution uses the Diffusion of Innovation (DOI) Theory developed by Rogers in 1962 to analyse entrepreneurship education in Nigeria. This theory explains how over a certain period of time an idea spreads through a specific population. This is something that promises hope for Nigeria seeing as entrepreneurship is a new phenomenon in Nigeria. It is a phenomenon that has been introduced in a few tertiary education. However most youths are still unable to have access to entrepreneurship education in Nigeria.

As of 2016, According to the National Bureau of Statistics (NBS) the unemployment rate in Nigeria was 14.2%. In 2016 Nigeria went through a recession that affected the country’s economy massively. The major impact of the recession was an increase in unemployment rate. The Youth Unemployment rate increased to 33.10 percent in the third quarter of 2017 from 29.50 percent in the second quarter of 2017. A lot of sectors were affected during the recession especially the aviation industry. For example, Arik Air accounts for 55% of passenger traffic in Nigeria. In 2016, as a result of the recession, Arik Air, one of Nigeria's largest airlines, had to be taken over by the government to prevent it from collapsing.

Aero Contractors, one of Nigeria's oldest working airlines, suspended operations due to economic challenges. A lot of effort has been made by the Government of Nigeria to reduce the unemployment rate. The government went about this by threatening businesses that cut jobs and also those that fired workers. All of their recent efforts to reduce the unemployment rate has proven to no avail. In 2016 the Federal Tax Agency received over 700,000 applications for 500 advertised position. The population to which unemployment seems to affect the most are the youths. This is because the youth–especially those recently out of school– are looking for jobs, but there are a limited number of openings.

Figure 1. Below shows the unemployment rate and the underemployment rate (which is the underuse of a workers due to jobs that do not use the workers’ skills) in relation to different age groups. The youths in Nigeria account for 19.61 % of the population, with over 19 million males and 18 million females. It can be seen in Figure 1. That the unemployment rate as well as the underemployment rate is highest from ages 15-24. The paper Youth Unemployment in Nigeria: a Time for Creative Intervention talks about entrepreneurship as the ability to develop new ventures or apply a new approach to an old business. Entrepreneurship can also be defined as the pursuit of opportunity through innovation.

People used to think entrepreneurship was just the creation and management of small businesses, but companies such as Dell and Microsoft have shown that it is not the case. Entrepreneurship does not require making plans, but rather acting on those plans. Regardless of whether or not one creates a business that becomes profitable, they are still considered an entrepreneur. The definition that best describes entrepreneurship is that of Stevenson and Guperts which says that entrepreneurship is the process in which an individual decides to pursue an opportunity fulfilling the needs and wants through innovation together with attendant risks. There are two types of entrepreneurship. The first is the Opportunity-Based Entrepreneurship which is when an entrepreneur decides to pursue a business opportunity that is perceived to have an impact.

Necessity Based Entrepreneurship occurs when there is no other choice left but to become an entrepreneur to make a living. These types of entrepreneurship allows youths to have more opportunity to get into the workforce. For the empirical analysis of this research, unemployment, youth total from thirty different countries were collected as well as the Starting a Business Ranking for the year 2017. According to World Bank “Youth unemployment refers to the share of the labor force ages 15-24 without work but available for and seeking employment (2018). “Starting a Business measures the paid-in minimum capital requirement, number of procedures, time and cost for a small- to medium-sized limited liability company to start up and formally operate”.

For the analysis, both of these were collected in order to determine if there is a correlation between unemployment and Starting a Business Ranking which is a variable that is used to measure youth empowerment. When looking into youth entrepreneurship, it can also be seen in the Romer Model. The Romer Model emphasises the importance of ideas, and the fact that there is no diminishing return on ideas, and this is because they are nonrivalous. Idea is a major aspect of entrepreneurship: seeing an issue or a problem, and coming up with an idea on a way it can be solved. It can be seen that there is a correlation between starting a business and youth unemployment rate.

The youth unemployment rate is in orange while the Starting a Business Ranking is blue. When analysing the results from Figure 2. It can be seen that the Starting a Business Ranking goes down as does youth unemployment. This pattern continues as the Starting a Business Ranking goes up, so does unemployment rate. There is a correlation. The Starting a Business Ranking is the leading indicator. A leading indicator is any economic factor that can be measured that changes before the economy starts moving in the direction as seen in Figure 2. Unemployment and Starting a business Ranking. A graph showing the relationship between Youth Unemployment total and Starting a business Ranking for the year 2017

Conclusion

Based on literature review and Empirical analysis, it can be determined that there is an actual correlation between Youth empowerment and Youth Unemployment in Nigeria. Empowering youth is inextricably tied to youth unemployment in Nigeria seeing as it is a solution. Nigeria is one of the most populated African country, and there has been a continuous growth in the population. In the Romer Model it can be seen that a change in the population would immediately and permanently raise the growth rate per capita output. However, this may be different in Nigeria due to the fact that there is a very low rate at which jobs are created, and there is a large pool of youths that graduate from University every year still trying to compete for limited number of jobs.

This is one of the reasons why entrepreneurship is key to the reduction of youth unemployment in Nigeria. When youths are empowered into creating their own business, by creating their own business, they are also creating jobs for people. While conducting the research for this paper, I found out that there is no actual measure of empowerment. Coming up with a variable that can be used in to measure youth empowerment was very difficult, as there is also limited data on this issue. I also found out that Unemployment is a good measure of the unemployed in an economy, however it is not a perfect indicator because it excludes discouraged workers, does not differentiate between full and part time work.

A potential policy that I would recommend is that the Government should invest more in entrepreneurship education, and also they should work on the structure of starting a business, so as to reduce the time and procedures required to start a business. One of the major limitations of my research was lack of sufficient data. And due to this I had to result in the use of variable that could be used to measure entrepreneurship, as well as there be availability of data. There are a lot of other measure of empowerment such as education, enrollment in school but due to lack of data I could not use them.