Illusion of government job creation
By Thompson Ayodele
 
The present government has assured jobless Nigerians it will create 10
million jobs within the next three years. Raising the hope of hapless
jobseekers in a time like this is important. It will enable them to keep
hope of securing jobs in no distant time alive. However, the reality on
ground tends to suggest that creating such amount of jobs within a short
time is a tall dream.
 
Of the current population of over 140 million, 60 per cent are youths.
Many of them just idle away with nothing to do. It is a misnomer for
government to think that it can create jobs for millions of people. Often
government policies stifle job creation. Across the world, government does
not create jobs. Government only creates condition under which millions of
jobs can be created.
 
Over the years, officials have continued to put square peg in round hole.
There was a time when several programmes and agencies were created to
train job seekers for some vocations. Most vocational skills need passion
and experience which schooling alone cannot confer. It is difficult to
understand how training obtained within six months or less can adequately
equip someone to face up to the challenges of the market. In addition, the
trainings were not practical and intensive enough in order to survive the
level of competition.
 
Creating 10 million jobs is more than sitting in Abuja making wishful
statements. It requires a wholesome revamping of policies that undermine
economic growth. Unemployment is an intractable problem. The truth remains
that government’s abdication of its primary responsibilities induced lack
of jobs. Unemployment has a direct relationship with inability of the
government to perform its required roles in the economy coupled with the
prevailing economic policies.
 
It is anybody’s guess if the 10 million people who will be employed in the
next three years will join the already over-bloated civil service or will
be absorbed by the private sector. Although government did not give
details on how that amount of jobs are going to be created, neither the
civil service nor the private sector can absorb half of that figure within
the next three years.
 
The reasons are obvious. Two years ago, the previous government intended
to cut 33,000 jobs, 20 per cent of all civil servants, stressing that the
downsize was necessary in order to meet bludgeoning wages. On the other
hand, the transaction costs for private sector that has the capacity to
employ millions of Nigeria continues to be on the rise.
 
Successive governments at all level have made feeble attempt at creating
jobs. This is done through the establishment of job creation agencies with
different acronyms. But all these efforts were largely unsuccessful. Many
of the initiatives never took off. Right now each state government is
trying to avoid political backlash over retrenchment of workers. Most of
them are careful not to lay off workers in order not to risk political
backlash.
 
The reality is that private sector is not only the driver and the engine
of the economy but also the superstructure upon which durable economic
growth can be built. Where local laws and drastic regulations inhibit
private sector, its capacity to create jobs will be undermined.
 
Nigeria has huge economic potentials. This is evident from the
astronomical growth in the capital market which recorded a total
transaction value of N28 billion in 2000. Last year the total market
capitalisation value rose to N10 trillion. Despite these potentials, the
private sector is held back through crumbling infrastructure and high
costs of doing business. According to Economic Intelligence Unit report
2007, Nigeria is ranked 8th where it is not conducive to do business. Many
private enterprises have scaled down operations or closed shop. Unofficial
figure put the number of new business that fold up yearly at 40 per cent.
 
Nigerian firms are highly uncompetitive even within Africa. Why won’t they
when in 2004 alone, incessant power outages cost Nigeria 15 per cent of
the manufacturing output. This figure is expected to rise since power
outage now is at all time low. In addition 85 per cent of manufacturers,
including those in informal business, provide themselves power supply.
Annually the cost of fuelling private power generators is N16.4 trillion.
Out of this amount, factories and commercial enterprises gulp N191.08
billion and N1.57trillion respectively. This amount can either be used to
expand existing business or set up new ones. This in turn will help in
creating jobs.
 
Aside from this, there are bottlenecks in accessing credit for medium and
micro-business enterprises which have the potential to create huge number
of jobs. The lending rates at present are far above the Central Bank of
Nigeria’s recommendation. While commercial banks take 26 per cent interest
on all loans aside from collaterals, the new micro-finance banks
established to cater for these categories of businesses charge 10 per cent
interest on a monthly basis. Per year the interests will be 120 per cent
on any amount borrowed. Interestingly, the amount a depositor has in the
micro-finance bank is not part of the total amount borrowed.
 
Under this circumstance, no appreciable jobs can be created. Compared to
other economies, the lending rates in Nigeria are high. For instance
lending rate is 3.5 per cent in Malaysia, 5 per cent in Korea, 9 per cent
in Kenya, 11.5 per cent in Egypt and 15 per cent in South Africa. The
implications of course are dwindling growth of the real sector, closure of
some industries, low capacity utilisation and inability to expand
production and create jobs.
 
It is not out of surprise that the president of the National Association
of Chambers of Commerce, Industry, Mines and Agriculture said: "Nigeria’s
hope of becoming the world’s leading economy by 2020 cannot be achieved
with the current excessive lending rate which can only kill industries."
 
Jobs cannot be created through mere slogans. The problems confronting
private sector are better addressed through public and private
partnership. Rather than giving a false hope over job creation, it will be
appropriate if officials should first of all look inward and create
conditions under which its 10 millions jobs will be created. Failure to do
so will make the intention to create jobs for the unemployed a pie in the
sky.
 
 
• Ayodele is the Executive Director of Initiative for Public Policy
Analysis, a public policy think-tank based in Lagos
 
 

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