Resolving Nigeria's High Growth-High Unemployment Paradox
17 Pages Posted: 28 May 2014 Last revised: 3 Sep 2014
Date Written: February 24, 2014
When Nigeria returned to democracy in 1999, real GDP growth rate was 1.12 percent, consumer price inflation was 6.6 percent, and unemployment rate was 8 percent. 15 years down the road, average real GDP growth is 6.5 per cent, inflation is 7 per cent, but latest available unemployment rate is 23.9 percent, and that was for 2011. One of the challenges in addressing the Nigerian unemployment situation is that until we know the facts in a timely fashion, it will be difficult to solve the problem. By extension, until we know the facts about unemployment in a timely manner, no one can tell how our well-meaning attempts to solve other problems (such as: (i.) aggressively tightening monetary policy stance to achieve lower inflation in the short term; or (ii.) selecting a fanciful oil price benchmark, that is lower than is required to enable nominal government budget keep pace with nominal GDP, in order to save for the rainy day), will only serve to make an already ugly unemployment situation uglier. Little surprise that unemployment rate increased threefold in the last fifteen years, the worst increases happening between 2007 and now. Nigeria now gets monthly inflation figures about two and a half weeks after the end of each month and quarterly GDP figures (nominal, real, and associated deflators) now arrive a month and a half after each quarter. But it takes about a year and a half for annual unemployment figures to be published in Nigeria. Nigeria’s fiscal policy (especially the selection of the oil price benchmark), monetary policy, and financial policy now clearly require explicit mandates about unemployment thresholds. But unemployment figures must be available with the same speed and frequency that inflation numbers now becomes available for the thresholds to be meaningful.
Keywords: Nigeria, Unemployment Rate, Economic Growth, Inflation, Monetary Policy, Fiscal Policy, Democracy, Global Commodity Prices
JEL Classification: J64
Suggested Citation: Suggested Citation