A low growth rate is much more than just numbers. Economists say that over time weak growth can have an insidious effect on a country’s prospects and options in ways not everyone appreciates. This was supposed to be the make or break year for Nigeria as a whole and despite having successfully navigated the political headwinds, it looks more and more like the economy is stuck in the mud.
The economy has been disappointing, walking on the slow side consistently for several months now and that has had several stakeholders worry that maybe this slow growth will linger longer than was initially forecasted.
The opening quarter of 2015, Gross Domestic Product (GDP) grew by 3.96% in real terms, year-on- year. This was lower by 1.98% points from the preceding quarter and by 2.25% points from the corresponding quarter of 2014. Quarter on quarter, real GDP was lower by 11.57%.
Rock-bottom global crude oil prices, added to the initial economic limbo the 2015 presidential elections left the economy in, slowed down Nigeria’s GDP growth, in the first half of the year. Business owners have bemoaned the effects that this is having on their businesses, but a more worrying trend is in how it is affecting jobs in economy.
The education Sector was the leading employer in the first quarter of 2015, with 58,329 jobs or 44.55% of the total, showing a 6.58% marginal rise or 3,600 jobs when compared with the 54,729 jobs recorded in the fourth quarter of 2014. The second leading employer was the Manufacturing Sector with 19,647 jobs or 15% of the total. There was a marginal drop of 37.43% or 11,754 jobs when compared with the figure gotten in the fourth quarter of 2014. Trade sector was the third leading employer creating a total of 15,206 new jobs or 11.61% of the total jobs. The lowest number of new jobs was created in Electricity, Gas, Steam and Air Conditioning Sector.
However, the lull has begun to see workers being laid off across the economy and fewer jobs created. Reports on Friday indicated that the Microsoft office in Nigeria was going to lay off 85% of its Nigerian workforce. The banking sector, due to the harsh operating environment has had to downsize repeatedly to remain profitable. Also on Friday, NUPENG threatened to go on strike to protest Chevron’s failure to pay sacked workers’ entitlements. Chevron is however not alone in having to let workers go, as this trend has cut across the oil and gas sector in Nigeria, and indeed the world.
It’s reported that U.S. companies cut an estimated 1,100 oil-and-gas jobs in February. According to the Beaumont Enterprise, those numbers represent a 0.6% decline in oil-and-gas payrolls. Local economist Angelos Angelou believes 150,000 jobs related to oil-and-gas production could be lost in America alone.
Austin Nwachukwu, who runs an energy servicing company, has had to consider relocating his business as the harsh business climate and policy somersaulting has continued to affect his business. He said “My Company had 46 personnel as at January 2015, but we have been forced to downsize to just 11.”
Analysts also believe that president Buhari’s refusal to name a cabinet or clearly define an economic direction for his administration has not helped the lull and will only work to further compound the economic situation.
Though, workers vacating their positions was not entirely due to job loss, as a total of 97,020 employees for various reasons exited the workforce in Q1 of 2015, which was 43,816 exits or 31.11 per cent fewer employees leaving the workforce in first quarter of 2015, compared to Q4 of 2014. The most commonly cited reason for the exit was to further education, for which 30,748 exits or 31.69 per cent was recorded. This reason was also the highest in the fourth quarter of 2014, there was however a decline of 20,819 or 40.37 per cent from the 51,564 exits in the Q4 of 2014. “Others reason” for the exit rose from third position in Q4 of 2014 to become the second most cited reason in Q1 of 2015, representing 19.322 or 19.92 per cent of the total . While “slowdown in business” dropped from its second position in Q4 of 2014 and became third with 12,982 exits or 13.38 per cent in Q1 of 2015.
