Nigeria’s Economy: Inflation, GDP Growth and Jobs – By Emeka Chiakwelu

Posted by admin Articles, Columnists, Emeka Chiakwelu, NNP Columnists Friday, September 23rd, 2011

By Emeka Chiakwelu, NNP, Sept. 23, 2011 – Nigeria’s grip on inflation rate is becoming consistent at third quarter
with a single digit at 9.3 percent, and with an impressive economic growth
rate at 7.72 percent in August. So far a significant development and good
track record is brewing, for at the beginning of third quarter inflation
rate was 9.4 percent in July, and the latest recorded 9.3 percent shows a
slightly declining inflationary trend.

But looking at the country’s misery indicators intrinsically –
overwhelming poverty and crushing unemployment; these fabulous numbers are
not making impact to the suffering masses that are without jobs and are
etching out a living with less than two dollars per day. Economic
experience by average Nigerian, who can barely feed his family three
decent square meals per day cannot correlate with the economic expansion
of the country’s GDP. Positive economic growth should fundamentally
ameliorate the misery index, lest it become senseless and insignificant to
the majority of Nigerians.

Before Nigerian financial and economic policy makers beat their chest and
celebrate with their talking drums they should realize that the country is
not yet from the wood. The much talked removal of oil subsidy and its
implementation has not been resolved and neither the recapitalization of
collapsing banks has been ceased. Let’s not overlook the increasing growth
in food prices, which is the biggest contributing force to the consumer
inflation rate. The food inflation rose from 7.9 percent in July to 8.7
percent in August and that is not good.

With these enviable numbers on inflation and GDP rolling out from the
National Bureau of Statistics (NBS), the life style and economic wellbeing
of 70 percent of Nigerians are stagnant and deplorable. There is no
adequate housing, the food prices are going beyond the reach of the poor
while the scarcity of the expensive kerosene makes life unbearable.

Nigeria is in the midst of confidence building news on economy and one
cannot downgrade it. With decreasing turmoil at the Niger Delta; oil
production in the second quarter of this year is averaging 2.45 million
barrels daily. This is an improvement compared to 2.35 barrels of the
previous year with more turbulent Niger Delta.

Bloomberg reported that “Inflation in Nigeria, Africa’s biggest oil
producer, stayed near the limit of a central bank target and the economy
expanded 7.72 percent in the second quarter, keeping pressure on the bank
to raise interest rates. The inflation rate fell for a second month to 9.3
percent, the lowest level in more than three years, from 9.4 percent a
month earlier, Yemi Kale, head of the National Bureau of Statistics told
reporters today in Abuja, the capital. “Much of the improvement in
headline consumer price inflation can still be explained by the positive
influence of domestic food prices, and this should continue in the months
ahead,” Razia Khan, the London-based head of African economic research at
Standard Chartered Bank Ltd., said today in an e- mailed note to clients.”

Rising unemployment

The numbers on joblessness is not forth coming and the tabulations by
National Bureau of Statistics (NBS) may be misleading. The last number I
saw on unemployment was 19.7 percent in 2010. The National Bureau of
Statistics website is not current with the unemployment figures. The last
number it recorded was 40 percent unemployment in 1992. The 19.7 percent
was provided by the former minister of Finance Mr. Olusegun Aganga last
year. He did acknowledge that almost half of Nigerian youths at the age
group of 15-25 years were without jobs.

And with the massive unemployment devouring the youths of the country it
might be fastidious to peg the unemployment at an extremely conservative
number of 19.7 percent.The 19.7 percent is not a realistic number when the
rural unemployment is put into consideration and effectively tabulated.
Even with conservative extrapolation the joblessness in the rural Nigeria
where most people live will make the tendered number laughable. The low
technology and paucity of technical know-how makes the collection of data
cumbersome and sometimes out of reach.

Writing about jobs in Nigeria, Nasir El-rufai the former minister of
capital territory Abuja, could not arrived at the exact unemployment
figure but nevertheless he used the official numbers and also made his own
realistic extrapolation. This is the way he put it, “The jobless rates in
Nigeria have not fallen. On the same day but at different functions, the
Minister of Trade and Investment put the unemployment rate at 14-16 per
cent, while the Finance Minister put it at 21 per cent. The actual figure
may be much higher than both numbers. The millions of people with no jobs
represent a serious impediment to Nigeria’s economic development. Apart
from the immense waste of the country’s human resources, it generates
losses in terms of lower output which results in poorer incomes and
increased
poverty. It also causes social decay and inhibits national cohesion. In
fact, unemployment in Nigeria is a national security threat.”

He also wrote that, “Nigeria has about 90 million people who are willing
and able to work, but about 70 million of them have no gainful employment.
This is an alarming figure, but when the 4.7 million people captured in
the formal sector in the latest statistics from the Pensions Commission is
increased by the three to four times standard multiplier to capture those
in the informal sector, it means that only about 20 million Nigerians have
jobs, out of a population of 162 million. This simple fact causes the
country a loss of about N2 trillion annually from the absence of
commercial activities that ordinarily should have taken place but did
not.”

The lack of job is one thing that cannot be politicized for real people
are suffering .Job creation must be initiated by government by creating
the fertile environment that will attract capital and investments.
Government does not necessary create jobs but does aid the private sector
in making job creation possible and imminent. Nigeria’s favorable economic
indicators on economic growth and inflation can become a precursor in
solving the problem of unemployment.

____________
Emeka Chiakwelu is the Principal Policy Strategist at Afripol
Organization. Africa Political and Economic Strategic Center (Afripol) is
foremost a public policy center whose fundamental objective is to broaden
the parameters of public policy debates in Africa. To advocate, promote
and encourage free enterprise, democracy, sustainable green environment,
human rights, conflict resolutions, transparency and probity in Africa.
http://afripol.org/ [email protected]wp_posts