In a concerning revelation, Nigeria and several Sub-Saharan African nations have earned the unfortunate distinction of having the world’s highest rates of self-employment and unpaid family employment, as disclosed by the World Bank in its latest Africa’s Pulse report. This disconcerting ranking is contributing to diminished worker productivity and constraining earnings based on skill levels.
The report underscores the pressing need for job creation within the region, emphasizing the stark contrast between Sub-Saharan Africa, where only one in six workers holds a wage job, and high-income countries, where one in two does.
Furthermore, the scarcity of wage employment leads to a decline in job quality, marked by precarious employment conditions, underutilized skills, inadequate equipment, and substandard working conditions, all of which contribute to high levels of involuntary self-employment and informality in the labor market.
Recent data from the National Bureau of Statistics (NBS) paints a vivid picture of Nigeria’s “hustle economy,” where the informal sector commands a significant share of employment. In the fourth quarter of 2022 and Q1 of 2023, a substantial 73.1 percent and 75.4 percent of employed Nigerians, respectively, were self-employed in their own businesses or farming activities for their primary jobs.
Conversely, the percentage of Nigerians engaged as wage-employed employees in their primary jobs declined from 13.4 percent to 11.8 percent.
The World Bank’s report authors emphasize the critical role of capital in fostering the structural transformation required for high-quality employment opportunities. They lament the absence of labor-intensive manufacturing sectors in Africa and underscore that improvements in agricultural productivity are driving service sector growth in urban areas, translating into low labor productivity and inadequate investment in labor-complementing capital.
Nigeria’s economic struggles over the past seven years, marked by oil price fluctuations, pandemic disruptions, and economic reform challenges, have slowed the growth of key job-creating sectors like agriculture, manufacturing, and trade.
High inflationary pressures have eroded consumers’ purchasing power, pushing millions into poverty. Headline inflation reached an 18-year high of 25.80 percent in August.
These economic uncertainties have driven many jobless Nigerians to seek opportunities abroad, contributing to a significant brain drain that impacts the labor quality of Africa’s most populous economy.
The World Bank calls upon African policymakers to craft inclusive growth strategies that provide stable and productive employment opportunities, particularly for the more than 10 million youths entering the workforce annually. The report emphasizes the need to generate firm growth, high-quality jobs, and skill development that aligns with business demand.
“A strategy that enables firm growth and delivers high-quality jobs would rest on the following pillars such as fiscal stabilization and debt reduction, political stability, and a stronger institutional framework to support markets and demand-driven skills and improved organizational transformation of work,” concludes the World Bank.
