Nigeria’s unemployment rate increased by 1.2 percentage points to 5.3% year-on-year (YoY), according to the Nigerian Bureau of Statistics (NBS).
This was revealed in the NBS’s Nigeria Labour Force Survey Report for the first quarter of 2024, released yesterday. The report highlighted disparities in unemployment by gender, age group, and level of education, with a noted decrease in youth unemployment from 8.6% in Q3 2023 to 8.4% in Q1 2024.
“The unemployment rate for Q1 2024 was 5.3%, showing an increase from 5.0% recorded in Q3 2023. The unemployment rate among males was 4.3%, while it stood at 6.2% among females,” NBS noted. It added that unemployment was higher in urban areas (6.0%) compared to rural areas (4.3%).
The survey also highlighted that individuals with post-secondary education had a 9.0% unemployment rate, while those with post-graduate education had a lower rate of 2.0%.
The report indicated some positive trends, particularly a decline in underemployment, with the figure dropping from 12.2% in Q3 2023 to 10.9% in Q1 2024.
CBN Hikes Monetary Policy Rate
Meanwhile, the Central Bank of Nigeria (CBN) raised the Monetary Policy Rate (MPR) to 27.25%, up from 26.75%, during the 154th Monetary Policy Committee (MPC) meeting. CBN Governor, Olayemi Cardoso, said, “To attract investments into the economy, efforts must be sustained to achieve a positive real interest rate.”
The increase comes amid concerns from economic stakeholders, including the Nigerian Association of Chambers of Commerce Industry, Mines and Agriculture (NACCIMA), and the Centre for the Promotion of Private Enterprise (CPPE). These groups argue that the interest rate hike could stifle economic growth by exacerbating borrowing costs.
Dr. Muda Yusuf, CEO of CPPE, expressed concern, stating, “It is quite troubling that at a time manufacturers, entrepreneurs, and other investors are craving for a breath of fresh air, the CBN has chosen to tighten the noose on them by resorting to further monetary tightening.”
Diverging Views on the Unemployment Rate
In contrast to NBS figures, some experts have raised concerns about the accuracy of the reported 5.3% unemployment rate. Ejike Nwuba, CEO of The Renaissanceafrica Company Ltd, commented, “The reality on the ground is far worse. There is real unemployment and underemployment in Nigeria, and it is the harbinger of an economy in ruins.”
Nwuba emphasized the need for Nigeria to shift from a consumerist, import-driven economy to a more productive, export-driven model, citing China’s success in leveraging its human capital for economic growth. “Our greatest resource as a nation is our people, and we must unleash their potential for the country to advance,” he said.
Economic Outlook and Inflation Concerns
CBN Governor Cardoso also addressed inflationary concerns, noting that while headline inflation had moderated, core inflation remained high due to rising energy prices. The MPC acknowledged the fiscal deficit and reiterated the need for collaboration with fiscal authorities to stabilize prices and tackle excess liquidity in the system.
Looking ahead, Cardoso expressed optimism about the impact of the Dangote Refinery, which he believes will alleviate foreign exchange pressure once exportation begins. “The nation’s FX position will greatly improve once the exportation of products from the refinery becomes a reality,” he stated.
Concerns Over Borrowing Costs
The hike in MPR is expected to push borrowing costs higher, potentially above 35%, which many fear will lead to more businesses struggling to meet their loan obligations. Ayodeji Ebo, Managing Director of Optimus by Afrinvest, warned that “the rise in energy costs and borrowing rates will further strain business operations.”
Investment banker Tajudeen Olayinka added, “This decision will likely slow output growth and exacerbate supply-side inflation, although it may attract foreign portfolio investments to improve the foreign reserves and exchange rate.”
With the unemployment rate rising and borrowing costs increasing, the economic challenges facing Nigeria are mounting, and the effectiveness of these recent monetary policies will continue to be closely scrutinized.
