Blog African Lions - Nigeria's jobless growth.

 
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Nigeria, sub-Saharan Africa's biggest economy and most populous country, has recorded high growth in recent years. Indeed, real GDP growth rate was 6.31 in 2014 (compared to the regional average of 4.35). Life expectancy has also increased (by 6.9 years since 1980) and so has mean years of schooling (by 0.2 years since 1980). Despite these achievements, like many other African countries, poverty and unemployment rates remain high. In fact, its unemployment rate increased from 23.9 percent in 2011 to 25.1 percent in 2014. So, where are the expected gains in poverty and unemployment from Nigeria's growth?

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It turns out, as Olu Ajakaiye, Afeikhena T. Jerome, David Nabena, and Olufunke A. Alaba find in a recent paper, Understanding the relationship between growth and employment in Nigeria, that Nigeria's growth has indeed been "jobless." Not only that, the authors, investigating sectoral growth and employment trends within Nigeria as part of the wider African Lions project, discover that the country's growth "has been sustained largely by factor reallocations rather than productivity enhancement and that employment elasticity of growth has been positive and quite low, reflecting the country's poor overall employment generation record, especially in manufacturing." In short, jobs are not moving to manufacturing and, in general, are not being created fast enough.

Labor in Nigeria moves towards the services sector

Like in many sub-Saharan African countries, the authors point out that labor is leaving the low-productivity agricultural sector for the services sector, unlike the structural transformation trend seen in Asia where labor moves to the high-productivity manufacturing sector instead. As seen in Figure 1, the services sector's share of the labor force rose dramatically from 2000 to 2014--from 24 to 44 percent. At the same time both agriculture's and manufacturing's share of the labor force dropped: agriculture from 51 to 44 percent; manufacturing from 11 to 6 percent.

Figure 1: Sectoral share of employment in Nigeria, 1970 to 2014 Agriculture Manufacturing Services Mining and Quarrying, and Construction, Electricity, Gas and Water 1970 68 12 18 1 1980 68 11 20 2 1990 60 14 23 3 2000 51 11 24 4 2005 52 9 34 4 2010 49 7 39 5 2011 49 7 40 5 2012 47 6 41 5 2013 46 6 43 5 2014 45 6 44 5 Source: Ajakaiye et al.'s computations from underlying data obtained from NISER (2015). Note: Table made from bar graph. The move to...

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