assignment
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InvestinginNigeria.pptUnemployment in Nigeria
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Introduction
Africa is viable market for companies’ expansion.
Africa is one of the emerging markets in the world.
Africa is the growing at a faster rate than other emerging markets.
Nigeria is the biggest economy in Africa.
Unemployment is an economic concern affecting Nigeria.
The growth of a company depends on the expansion of a company to reach and diversify the portfolio of its clients. The growth of a company is measured by the revenue it brings. The emerging markets of Africa, Asia, and Latin America provide a large market a companies goods due their huge populations and presence of a huge young population. Africa is developing at a faster rate that the other emerging markets propelled by their huge populations and rise in the middle class. Nigeria, located in western Africa, has the largest economy in Africa; therefore it will be prudent to invest in the country where the oil accounts for a huge part of their national income. Unemployment in Nigeria is a major concern in Nigeria.
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Nigeria, the country
Nigeria is a western African Country whose capital is Abuja.
It has a population of approximately 202 million people with the largest young population in Africa (World Bank, 2020).
Nigeria has a total area 923,769 square kilometers.
Nigeria’s economy is the largest in Africa with a gross national income of 515 billion dollars.
It is Africa’s leading oil exporter.
It has Africa’s largest natural gas deposits.
Nigeria is a western African country whose headquarter is in Abuja. It has a large population of approximately 202 million people where the majority are young. Therefore, the population forms a huge prospective market for goods and services. Nigeria’s total landmass of 923,769 square kilometers makes it one of largest country in Africa. According to the world bank, Nigeria is Africa’s leading exporter of oil and has the largest deposits of natural gas. Nigeria has a huge economy with a nominal GDP of 515 billion dollars which can be attributed from the sale of crude products.
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Nigeria’s Economy
Nigeria has the largest economy if Africa and 30th largest in the world.
Nigeria’s economy is heavily dependent on oil exports.
Nigeria’s economy has grown over the past years at a rate of 2.2% in 2019.
Oil exports account for 80% of the country’s exports.
Nigeria’s economic growth is affected by oil prices.
Nigeria is Africa’s largest economy in Africa followed by South Africa and the 30th largest in the world. Nigeria’s economy is highly dependent on oil which accounts for 10% of its gross domestic products. It also accounts for 80% of Nigeria’s total exports. Nigeria’s economy is affected by oil prices where the non-oil sector is affected by the oil prices fluctuation because oil revenues account for 50% of Nigeria’s government total income. A third of the banking sector credit can be attributed to the oil industry
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Nigeria’s Economy (continued)
Nigeria’s inflation rate is 11.4% as at 2019.
The economy of Nigeria is divided into agriculture, industry, and services sectors.
The agriculture sector contributes 21.2% to GDP, industrial sector contributes 25,7% to GDP, and services sector contributes 52% to GDP.
Agriculture, industrial, and services sectors employ 36%, 12%, and 52% of Nigeria’s workforce respectively.
The corporate tax rate is 30%.
Nigeria’s economic growth rate is 2.2% (World Bank, 2020).
Nigeria’s inflation rate of 11.4% in 2019 has risen from single digits in 2014 is very high when translated into the prices of goods and services. The economy of Nigeria is divide into agriculture, industry, and services sectors which account for 21.2%, 25.7%, and 52 % of the total GDP respectively. The sectors also contribute to 36%, 12%, and 52% of Nigeria’s workforce. The corporate tax rate is 30% on top of value added tax and capital gains tax. The economic growth rate of Nigeria is 2.2% which is a drop from 6.3 % in 2016 according to the world bank (World Bank, 2020)..
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Unemployment in Nigeria
Unemployment in Nigeria is at 27.1%.
Unemployment has been rising since 2016.
Unemployment leads to high poverty levels.
Unemployment is affected by:
High population growth rate
Slow economic growth
The oil crisis of 2016
Nigeria's unemployment and underemployed rate for persons above the age of 16 years has been rising steadily since 2016.. The 2020 unemployment rate as published by the Nigeria national bureau of statistics is 27%., where unemployment is high in the rural areas compared to the urban areas. Youth unemployment has risen from 19% in 2016 to 36.5% in 2019. Lack of employment opportunities leads to poverty where Nigeria had 87 million people living in poverty in 2018. unemployment in Nigeria is caused by the high population growth rate that is not met by equal rate of economic growth. Unemployment was increased by the 2016 oil crisis that resulted in 350,000 job losses
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Causes of Unemployment
The young generation prefers white collar jobs to labor intensive jobs (Bankole , 2020).
Boko haram and Niger delta insurgents.
Armed robbery.
Prostitution.
Child trafficking.
Corruption.
Poor money supply and lack of credit.
Nigeria’s unemployment is caused by various factors such as the preference of the young generation to stay in the job market rather than look for labour intensive jobs. The presence of boko haram and the Niger delta insurgents has led to many youths leaving education that leads to their unemployment. Other causes of unemployment in youths are armed robbery, prostitution, and child trafficking that limit their education leading to unemployment (Bankole , 2020). Corruption is another cause of unemployment because government officials steal funds that are meant for development and poverty alleviation. The last cause of unemployment is poor money supply and lack of credit facilities to the private sector which reduces the chances of creating employment due to lack of capital.
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Effects of Unemployment on the Economy
Positive relationship between unemployment and GDP.
Unemployment leads to low purchasing power.
Higher probability of increase in poverty and inflation rates.
Unemployment leads to poverty (Nwankwo, & Ifejiofor, 2014 ).
Small and medium enterprises are the major creators of employment.
Nigeria’s GDP has been growing over the years propelled by the agricultural and services sectors. However, the unemployment level has also increased leading to zero change in poverty levels because of the positive relationship between unemployment and the GDP. According to the world bank, approximately two million enter poverty each year in Nigeria (Nwankwo, & Ifejiofor, 2014 ). Unemployment reduces the purchasing power of Nigerians which is also affected by the high inflation rates. The lack of formal employment leads to the informal sector employing majority of Nigerians.
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Effects of Unemployment on the Economy (continued)
High annual population growth rate of 3.5% reduces opportunities for higher learning (Nwankwo, & Ifejiofor, 2014).
There is increased number of Nigerians who study abroad.
Unemployment leads to erosion of skills.
Unproductive labor force.
The population of Nigeria grows at 3.5% per year which means that only one out of 4 university applicants gets a slot. This leads to rich Nigerians studying abroad to give them and edge in the Nigerian market or opportunities elsewhere which leads to erosion of skills. The Nigerians who have graduated without jobs lead unproductive lives because they do not pay taxes and have no labor output (Nwankwo, & Ifejiofor, 2014 ).
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Effect of Unemployment of Investment Decisions
- Stalled economies.
- Low expenditure.
- Low purchasing power.
- Low money circulation.
- Slow economic recovery.
High unemployment affects the financial health of a country as it creates stalled economic periods. When people lack jobs, there is a decline in spending due to individuals low purchasing power. However, even those with the money are afraid to spend their money in stalled economies. The low expenditure leads to a decline in the money in circulation which slows economic recovery. High unemployment weakens an economy and lowers the rate of investment. Companies will be discouraged from investing if consumers are not able to purchase the goods provided, as there will be low return on investment. However, investment can be used to lower unemployment (Bande-Ramudo et al., 2014).
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Key Data Trends
In 2019, Nigeria’s unemployment rate stood at 27.1 %.
Underemployment in Nigeria was 28.6%.
Nigeria’s has a labor force of eighty million.
Unemployment rate among the youth stood at 20.7%.
Nigeria is the country with the highest number of people in in extreme poverty (World Bank, 2020).
High oil dependence has increased unemployment.
COVID 19 has increased Nigerians in extreme poverty.
The unemployment in Nigeria has increased to 27.1% in 2019 compared to 23.1% in 2013 representing a steady increase in unemployment. Underemployment increased to 28.6%. Nigeria has a labor force of 80 million people, which means that there is about 21.7 million Nigerians without gainful employment. The number of unemployed people in Nigeria exceeds the total population of 35 countries in Africa. Nigeria overtook India as the country with the highest number of people living in extreme poverty. Nigeria. According to world bank seven million Nigerians have fallen into extreme poverty (World Bank, 2020).
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Foreign Direct Investment (FDI) in Nigeria
- Nigeria is a target for FDI in Africa.
- It is Africa’s third host for FDI.
- In 2019, Nigeria’s FDI totaled $3.3 billion.
- Nigeria is diversifying its economy.
- The economy presents some advantages to the country.
- World Bank ranked Nigeria 131st worldwide for the ease of starting a business (Osabohien et al., 2020).
Nigeria is the third preferred destination for FDI in Africa after Egypt and Ethiopia. The country’s FDI dropped from $6.4 billion to $3.3 billion between 2018 and 2019 due to austerity measures. The country’s increasingly diversified economy has been trying to reduce its dependence on oil by improving its manufacturing sector. USA, France, China, Netherlands, United Kingdom are the main investors in FDI in Nigeria. The country boasts of a partially privatized economy, natural resources, low cost of labor and an advantageous tax system. Nigeria improved its world ranking for the ease of doing business from 146th to 131st between 2018 and 2019 (Osabohien et al., 2020).
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Conclusion
Nigeria is the largest economy in Africa.
It is also the most populous country in west Africa.
The country is highly dependent on the oil industry.
Nigeria has a high GDP but the per capita income remains unchanged due to high unemployment.
Unemployment is a major concern in the country.
Nigeria is a viable destination for foreign direct investment.
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References
Akeju, K. F., & Olanipekun, D. B. (2014). Unemployment and economic growth in Nigeria. Journal of Economics and Sustainable Development, 5(4), 138-144. http://journals.univ-danubius.ro/index.php/oeconomica/article/viewFile/4064/4256
Bande-Ramudo, R., Fernandez-Grela, M., & Riveiro-Garcia, D. (2014). Consumption, investment and unemployment: SVAR tests of the effects of changes in the consumption-saving pattern. Cogent Economics & Finance, 2(1), 933676. https://doi.org/10.1080/23322039.2014.933676
Bankole , K. (2020). Unemployment and its Effects on Economy. A Case Study. https://www.grin.com/document/539365.
Nwankwo, C. A., & Ifejiofor, A. P. (2014). Impact of unemployment on Nigerian economic development: a study of selected local government area in Anambra State, Nigeria. European Journal of Business and Management, 6(35), 103-112. https://core.ac.uk/download/pdf/234626038.pdf
Osabohien, R., Oluwalayomi, D. A., Itua, O. Q., & Elomien, E. (2020). Foreign direct investment inflow and employment in Nigeria. Investment Management & Financial Innovations, 17(1), 77. https://businessperspectives.org/journals/investment-management-and-financial-innovations/issue-341/foreign-direct-investment-inflow-and-employment-in-nigeria
World Bank. (2020). The World Bank in Nigeria-Overview. https://www.worldbank.org/en/country/nigeria/overview
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