A Policy Paper by Victor TC Anyanwu, Snr. Economist/Executive Director at Citizens for Justice, Employment and Transparency (C-JET), Port Harcourt.
1.The Problem
A Policy Paper by Victor TC Anyanwu, Snr. Economist/Executive Director at Citizens for Justice, Employment and Transparency (C-JET), Port Harcourt.
1.The Problem
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The problem of unemployment and poverty in Nigeria has transformed from obscurity and denial to a recent recognition and prominence as one of the most threatening national plagues. Theories and prescriptions are in surfeit; what is consistently in deficit is the implementation of effective policies and programmes to generate millions of sustainable jobs for the large army of unemployed. It is therefore intended in this pull-out to quickly review the situation of Nigeria’s unemployment, and make concrete pronouncements on what MUST be done differently in the 2014 budget cycle (and beyond) to start creating millions of jobs required to meet the nation’s employment need.
The Severity of Unemployment in Nigeria
President Jonathan had in the last quarter of 2011 stated that the country’s leaders risked insurrection if they failed to urgently create jobs for the jobless, particularly the youth. Before then, former President Olusegun Obasanjo had re-echoed the 2010 ILO Conference warning on the great danger posed by unemployment globally. Nigeria’s Vision 20:20-20 1st Medium Term (2010-2013) Implementation Plan, the NLC President, Omar (in his 2011 May Day Address), and ILO Director-General Guy Ryder (in the World Development Report for 2013) all captured the gravity of the problem in their various statements, concluding that“.. we have to act urgently, we have to act now and we have to target young people”. A young Nigerian graduate in Katsina town had in 2010 committed suicide over his prolonged period of unemployment, while a group of unemployed graduates in Yenogoa recently faced trial for “organizing unlawful protest” against their unemployment status. President Jonathan in his presentation of the 2013 budget speech said (concerning Unemployment and Poverty): “This constitutes an obstacle to sustainable development as it limits improvement in living standards, output and social cohesion which are key factors for achieving inclusive growth. Our challenge therefore, transcends how to achieve growth. Our objective is to achieve inclusive growth by identifying and developing job creation opportunities”. And still, for every slot of job opening advertised, there are conservatively an estimated 95 applicants. Just a few days to 2013 Christmas Day, one Fred Onuigbo in Gwarimpa Abuja set himself ablaze due to economic difficulty. Seeing that the problem still looms, the 2014 budget has been aptly tagged ‘Budget for Job Creation and Growth’.
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2. Efforts to Tackle Unemployment in Nigeria
Over time, and particularly since 1986, governments have instituted various measures and policies aimed at containing the plague (of unemployment and poverty), which appear to have made insignificant impact; these include: NDE, NAPEP/Keke Napep, NEEDS (I&II), and various “Skills Acquisition/Empowerment” schemes. We recall that the Obasanjo administration had in the year 2000 declared a N10bn (which was very big sum then) public works scheme for direct job creation, while President Jonathan had equally announced a N50bn direct job creation in the 2011 federal budget. No much impact came from any of these schemes and programmes by government. Most recently, the Government launched a Youth Enterprise with Innovation in Nigeria (YouWin) programme, the Community Service, Women and Youth Empowerment Programme (CSWYEP) under the SURE-P, and the Graduate Internship Programme, “in which participating private companies provide one-year internship to 50,000 graduates, paid by the Federal Government. It is not without reason that many are saying that all these government-sponsored job creation and poverty reduction schemes and programmes share a common destiny of publicity blitz and gradual fizzling out from the scheme of governments’ priorities.
Many are quick to ask why the very robust and intellectually sound and tested National Action Plan on Employment Creation (NAPEC) has been left out of all these schemes since it was finalized for implementation in 2009. NAPEC enjoyed wide-range support and contributions from both national and international stakeholder bodies like the ILO, the Federal Government of Nigeria (apart from the Labour Ministry), the National Assembly, NECA, NLC, TUC, the World Bank, a team of National Consultants, and other international development partners. NAPEC adequately provided answers for Nigeria’s employment need from 2010 to 2020, in line with NV20:20-20 while exposing the abundant job opportunities in 11 key sectors of the economy. NAPEC was rightly anchored by the Federal Ministry of Labour and Productivity with rich technical support/contributions from the ILO. Many are wandering why the government prefers YOUWIN to NAPEC.
3. The Case Against YouWin
The case against YouWin is legion, notably: (i). It is not rooted in or linked to any existing strategic plan on job creation and poverty reduction. (ii). It has neither legal status nor budgetary provisioning (before 2013 federal budget), except that it drew from padding in the Executive budget.(iii). It is elitist as it cannot capture the large majority of both urban and rural unemployed that have no access to its mode of engagement. (iv). Its criterion of “rigorous Business Plan” is subject to deceit and cloning, even as a good plan (probably prepared by a paid agent) will not automatically transform into a successful enterprise. Such flamboyant business plans are not critical to the conversion of many quick-win business opportunities in the Agriculture and other sectors of the economy. (v). It does not address the demand for entrepreneurship in peculiar areas like nuclear power or rocket science to qualify for exclusive treatment.
(vi). It is a stand-alone micro-business approach that is historically characterized by high mortality rate, limited innovation capability, and job-churning. (vii). Its target of “creating 80,000 to 110,000 jobs in three years”(with about 6,000 youth entrepreneurs) makes an insignificant impact on the requirement for 75 million jobs needed up to 2020. (It lacks the inclusiveness of a macroeconomic large-impact dynamism reminiscent of the Keynesian order necessary to pull the economy out of its prolonged under-employment equilibrium). (viii). At an average of N6million per grantee, YouWin is a very expensive job programme that can only be accessed by a privileged/lucky few in the urban areas. The high cost of implementing the selection process (through the use of ”local and foreign experts”) has not been factored in, probably because these and related high cost of ceremonies are borne through other government budget heads. Conversely, the NDE empowerment package per graduate beneficiary is between N200,000 and N250,000, while a cooperative development alternative scheme costs an average of N350,000 per sustainable job.(Even the newly established SURE-P Implementation Committee has attracted wide criticisms as a wasteful administrative hierarchy that has no clear direction on how to confront the unemployment plague). (ix). YouWin is an implicit indictment and loss of confidence in other existing programmes like NDE; it is seen by many as an unhealthy policy summersault too costly to incur.
(x). The large number of unemployed and poverty of many make it inappropriate for the government to give such gifts (up to N10m grant) to a “lucky” few, when many are in dire need of credit (low-interest credit regime for the real sector) to finance their businesses; what Nigeria’s unemployment problem needs is universal access to credit, and not gifts from government. There are many entrepreneurs and ailing (but viable) businesses in need of finance. (xi). YouWin has no bright prospects of high success rate and sustainability; it seems destined to go the way of its preceding government-sponsored job creation projects. (xii). The NAPEC and allied Cooperative Development Strategy are by far superior alternatives to YouWin.
4. How to Create Millions of Jobs in the 2013 Budget and Beyond
4.1 Policy and Operational Issues
The situation we currently find ourselves is similar to the global depression of the 1930s, during which epochal economist John Maynard Kynes diagnosed the American economy as experiencing “stag-flation” and under-employment equilibrium, with burgeoning unemployment and high inflation existing together. For how else can we explain our debilitating high wage-induced labour crises in the face of explosive unemployment rate? While CBN’s independent and controversial half-a-decade of restrictive monetary policy has succeeded in clipping the inflationary wing, the associated high unemployment rate implicates the institution of a more inclusive policy framework for generating millions of jobs in the economy. The present YOUWIN/SURE-P job schemes suffer from a flawed “Okada-keke-NAPEP” mentality. Accordingly, a battery of pragmatic fiscal-cum monetary policy measures will require that:
(i) Government must urgently convene a relevant stakeholder meeting to clinically review the continued operation of all job-creation schemes like NDE, YouWIN and SURE-P programmes - even in the spirit of Oronsaye Committee’s Report. (ii) We must start a vigorous implementation of the National Action Plan on Employment Creation (NAPEC) in the identified 11(eleven) key sectors. NAPEC thoroughly analyzed Nigeria’s unemployment situation, and proffered a realistic action plan for meeting the country’s need of about 75 million jobs by 2020. It is rightly stated that Nigeria’s agricultural sector alone has the potential to absorb the labour force of the whole of West Africa.(iii) Employ the Cooperative Development Strategy (CDS) patterned after the Mondragon Cooperatives of Spain’s Basque Province – (a copy of relevant proposal documents had been sent to some MDAs and the Coordinating Minister of the Economy) - as envisioned in NAPEC and NV20:20-20 documents, with due focus on youths and agriculture. The efficacy and superiority of cooperative business development structure has been globally acknowledged, especially where, as in Nigeria’s case, resource-sharing is made more imperative by infrastructure deficit. The stand-alone micro-businesses (of YOUWIN and SURE-P) are often stymied by their paucity in both materials and skills resources, and thus fail to actualize on the high expectations from their promoters as the focus of public policy on job creation.
NAPEC identified great potentials in 11 key sectors of the economy, namely: Agriculture, Info-tech, Works & Housing, Petroleum and Solid Minerals, Transport, Power & Energy, Education, Commerce & Industry, Health, Informal Sector, Tourism, Culture, Entertainment & Sports. (iv) Ensure the existence of at least 2,000 virile cooperative societies in each state and FCT with a minimum membership of 50 persons in carefully chosen lines of business, especially Agro-allied; a minimum of 3.7 million sustainable jobs MUST be created in the 2014 budget, even from agro-allied CDS units alone. (v) Governments to secure hectares and smaller parcels of farmland across the country before the next planting season(s) for use by participating cooperative societies. The implementation of the CDS will be done largely by the OPS –with minimal intrusion from government officials.
vi) A fundamental Policy Review and restructuring of banking and the entire financial services sector by:
➢ Compelling banks to be more responsive to the needs of the real sectors in the economy;
➢ Directing MDAs to domicile their accounts with only credit policy-compliant banks
➢ Apart from other fundamental restructuring, changing the name of Microfinance Banks to Microfinance Bureaux/Agencies, as there seems to be some connotation of flamboyancy and recklessness in the conventional “bank” name. This restructuring will be aided by business practitioners from outside the banking system –so as to maintain objectivity and ability to think outside the box.
➢ Governments to call for commercial banks to channel a fixed percentage of their deposits to the accredited microfinance bureaux/agencies for lending to the informal sector at fixed interest range.
➢ Banks to collaborate with the National Identity Management Commission (NIMC) and other bodies to quickly produce a reliable national Identity scheme for easy identification and tracking of borrowers.
CBN ensuring the enthronement of a single-digit interest rate, and ridding the system of obnoxious charges on customers’ accounts. ). The CBN’s policies on banking/financial institutions, credit and interest rate, etc, must be reviewed to align with the overarching national objective of tackling unemployment; the CBN monetary policy Board should henceforth show equal concern for unemployment-targeting as with inflation-targeting.
4.2 Funding
The large outlay of funding requirement for job creation has been partly provided for in the NAPEC and NV:20-20-20 documents, and will come from different sources including: -budgetary allocations to the MDAs, saving from wasteful spending and curtailment of fraud within MDAs, plough-back from pension fund lying fallow or being stolen in the loot orgy, voluntary contributions from organized labour unions’ participation in the Cooperative Development Strategy programme (It will be necessary that labour and private sector groups key in to the job creation effort by subscribing to a Food Security Bond/Employment Bond for pooling funds into the agro-biz sector of the CDS job scheme), and loans/grants from friendly international development agencies and countries.
4.3 Labour Process Changes
The creation of millions of jobs in the current state of the economy will be facilitated by significant labour process changes like:
• Redistribution of available jobs in the form of job-sharing, review of over-time work policy, part-time work policy, work-life balance scheme, maternity/paternity leave policy, etc. Some of these measures are currently being observed in the transport sector where available passengers/cargoes are shared among operators. This is an implicit poverty-reduction policy through income harmonization. Countries like USA, Germany, Italy and Spain have succeeded in cushioning the negative effects of the global job crises with the implementation of pragmatic labour process changes. It was in this vein that President Barak Obama in his 2012 re-election Speech, said: “I am hopeful.. because I have seen that spirit at work in America. I’ve seen it in the family business whose owners would rather cut their own pay than lay off their neighbors, and in the workers who would rather cut back their hours than see a friend lose a job (Tuesday, 7th November, 2012).
• A buy-in from organized labour and employers’ associations is necessary for the success of proposed labour process reforms. There will be a need to strike a positive impact balance in the trade-off between unsustainable wage structure and increase in employment. China leveraged her low wage rates and relative industrial peace to ascend to the enviable position of world’s second largest economy; and this is very instructive to Nigeria.
• A repositioning of the Labour and Productivity Ministry to embrace the challenges impinging on the above labour process changes is implicated. Even if a labour ministry does not engage in direct employment activities, it still has a critical role to play in catalyzing labour process changes that will spur the private sector to engage additional workers from the teaming unemployed. Wide income disparities and pervasive rent-seeking activities do not help the drive towards inclusive growth with rapid job-creation. Much of US’ Stimulus Acts are implemented through labour process programmes. The current political expediency-structured approaches of our Labour Ministry leave much to be desired; worse still when the Ministry’s 2013 score card posted a (an achievement?) claim of having increased public sector wage by 53% across board! It is obvious that more intellectual and professional capacity is required to inject the critical paradigm shift in Nigeria’s labour policy thrust (if there is any in place). The positive effects of such repositioning in some ministries like Agriculture, Trade and Investment, and Aviation give hope that a pragmatic new approach to labour issues will facilitate the implementation of NAPEC in 2014 and beyond.
5. We must get our priorities right in budgetary allocations, drastically reduce wasteful appropriations, channel a large portion of the saving to private sector job creation programmes and projects, sustain the implementation of power sector reform programme, and ensure political stability with internal security of lives and property guaranteed. In these dimensions:
(i). The vast opportunities in the agro-allied sector must be harnessed along NAPEC and CDS prescriptions with both horizontal and vertical integration of aggressive business development: as efforts are made to increase the volume of output, the quality and productivity of factors must be optimized. All the agro-allied research institutes (including IITA, RMRDC, FIRRO, NOTAB, etc) must be tasked to earn their fat salaries by engaging in the commercialization of research outputs, and see the conversion of wasted staple produce into vitamin-enriched durables comparable with the likes of “Indomie”, canned foreign fruit drinks, etc, etc. Our locally produced garri, yam or cassava flour and rice must be vitamin-fortified, stone-free and bagged in different weights to meet the need of different classes of income earners/ consumers. Part of the December 2014 end-of-year bonus of public sector and OPS workers can be denominated in patronage of the agro-industrial products. These typically labour-absorbing production techniques will offer sustainable jobs to a large number of people. There must be a remarkable change in our approach.
(ii). The critical infrastructure components of power/energy, road network, and water must be satisfactorily addressed. The power sector reform programme must be successfully implemented, even under privatization.
(iii). The bloated recurrent budget profile of the public sector, led by the hefty cuts cornered by the legislature and political appointees, must be reasonably pruned: thus, the N150bn annual recurrent budget of NASS has to be reduced to a more reasonable figure of N25bn prescribed by independent management consultants, so as to free about N125bn for real sector/job creation investments.
Dr. Okonjo-Iweala, Coordinating Minister of the Economy and Finance Minister, is implored to take this matter (of job creation) very seriously, remembering the subsequent validation of similar suggestions we made in November 2011 over the fuel price hike, re-introduction of toll gates, and power sector reform implementation, etc. A failure to create millions of productive and sustainable jobs from the 2014 budget will worsen the country’s current unenviable socio-economic indices, apart from diminishing the reputation of the present administration that is hinged on her economic management team.
“We have to act urgently; we have to act now, and we have to target young people!”
THANK YOU.
Victor TC Anyanwu - Snr. Economist/Executive Director, Citizens for Justice, Employment and Transparency, C-JET, Port Harcourt Office: Tel: 08036676651; e-mail: [email protected]
The views expressed in this article are the author’s own and do not necessarily reflect the editorial policy of SaharaReporters
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