Unemployment in Nigeria: Is Population Growth Responsible?

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UNEMPLOYMENT IN NIGERIA: IS POPULATION GROWTH
RESPONSIBLE?

Abstract
The present paper aims at understanding the different factors leading to rising unemployment
rates in Nigeria in the recent years. The main focus of the research is to evaluate the variance of
the unemployment rates with the population rise in the country of Nigeria along with other
effective factors including GDP rates and labour force. The paper describes the econometric
model through emphasising on the ordinary least squares estimation strategy and performs
regression analysis of the obtained data on these factors over past twelve years in order to
observe the pattern of variability among the factors. The study also recommends strategies that
can be helpful in reducing the unemployment rates in Nigeria based on the findings of the
research.
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Table of Contents
1. Introduction..................................................................................................................................4
2. Literature review..........................................................................................................................7
3. Data and estimation strategy......................................................................................................10
4. Results........................................................................................................................................12
5. Conclusion.................................................................................................................................17
Reference List................................................................................................................................19
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1. Introduction
Unemployment is a reflective result of a number of societal challenges in an economy
including governance, population density, leadership and security. The positive correlation
between population density and the productivity of the economy in Nigeria has long been
saturated and presently the growing population is only creating increased poverty and
unemployment despite the rising in education levels. This study focuses on explaining the
relationship and impact of the various variables such as population, wage regulation, labour force
and GDP on the unemployment rates in Nigeria through econometric modelling. Previously till
the end of the 20th century, the rise in population meant more workers in the society leading to
greater productivity of the nation. However, the growth of population beyond counts and lack of
capability of the nation to accommodate and lack of matching employment skills have been
resulting in such issues in the country at present. The recent reports showed that the
unemployment rates in the previous year 2018 increased by up to 30% in Nigeria which
accounted for about 16 million people in the country of Nigeria being unemployed (VOA news,
2018). The verge course of employment for most of the workers in Nigeria are temporary work
availability which forces the majority of the population towards increased rates of unemployment
in recent years.
The percentage of the fully employed people among the population in Nigeria is less than
40% figuratively which is equal to less than 200 million people in the whole country (World
Bank, 2018). The dependency between the dependent variable unemployment and independent
variables including population growth, labour force and GDP growth in Nigeria has been
attempted to be explained through time series data analysis in this paper. The following parts in
the study include a description of the economic background in Nigeria, the study of previous
literature and empirical data analysis. The literature review section evaluates the existing
opinions of leading economists regarding the unemployment crisis in Nigeria and the following
data analysis section presents all the necessary information about the procedure of collection of
data and analysis methods. The concluding section outlines the final findings obtained from this
research and its implications in future.
Background
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The poverty levels in Nigeria have also been ever increasing along with the high increase
in population counts. It was mentioned by Weber et al., (2018), that the country has the highest
number of people below the poverty line which is more than 87 million. The population in
Nigeria accounts for more than 47% of the total population in Africa and the political unrests
also drive the economic activities and growth in the country downwards (World Bank, 2018).
Overall macroeconomic stability is essential for the all-inclusive growth in any nation. In spite of
being bestowed with extensive human and natural resources, rates of unemployment and poverty
affect the balance between the social and economic statuses. The economic growth in Nigeria
was comparatively high till the year 2002 in which the country experienced the highest GDP
growth rate of 15.32% (World Bank, 2018). Due to the rising unemployment and poverty levels,
the economic growth was reduced at a fast pace in the following years and in 2016 the GDP
growth rate hit the lowest levels at -1.617% (World Bank, 2018). Sustainable livelihoods are
almost non-existent in the Nigerian states and people are mostly working with unstable jobs that
do not provide enough for elevating the standards of living. At present, the increasing population
in the country only adds to the number of unemployed people due to no suitable education
facilities and industrialisation.
Figure 1: Unemployment rate in Nigeria
(Source: World Bank, 2018)
The poverty level increased in Nigeria due to various reasons. As pointed out by Tartiyus,
Dauda & Peter (2015), the infestation of the poverty in Nigeria is due to rising population, health
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issues, hunger and malnutrition, limited access to higher education, increased mobility and
inadequate housing. Unsafe environments for young people and exclusion in decision making
also cause the whole culture to shift towards increased unemployment levels. The projected
annual GDP growth rate in Nigeria till the year 2021 is 2.4% which has a great chance of being
hampered due to the rising poverty levels in the country. Being such a major part of the
population, the unemployment rates among the youth are even higher. More than 50% of the
youth in Nigeria are unemployed and are accounting for more than 160 million people (Uche &
Familusi, 2018).
Figure 2: Population growth in Nigeria
(Source: World Bank, 2018)
The increase in population over the years has always been more than 2% in Nigeria
(World Bank, 2018). The total population in Nigeria at present is more than 190 million people
among whom less than 35% are permanently employed within the country (VOA news, 2018).
The rate of completion of the education and persuasion of higher education are much lower
among the youth in Nigeria which makes the majority of the population unsuitable for required
jobs. The increased medical facilities in the recent years have decreased the mortality rates in
Nigeria considerably due to which the majority (60%) of the population in the states are the
youth who are volatile and susceptible to political motions and other aspects. Such factors, in
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