Business News
Latest states’ unemployment data reveals 20.9m Nigerians are unemployed
States’ unemployment data shows that 20.9 million Nigerians are unemployed as at third quarter of 2018.
States’ unemployment data shows that 20.9 million Nigerians are unemployed as at third quarter of 2018. This is revealed in a report released today by the National Bureau of Statistics (NBS).
According to the NBS report, Akwa Ibom reported the highest unemployment rate of 37.7% in Q3 of 2018. Unemployment rates also surged in other South South oil-producing states, despite the rise in monthly allocation to all tiers of governments.
Here are some Highlights
- Lagos State recorded the highest gains in full employment by adding 740,146 jobs
- Akwa Ibom state reported the highest unemployment rate of 37.7%
- Rivers State tops States with the highest unemployed population with 36.4%
- Lagos state reported the lowest rate of unemployment at 14.6%
- Six (6) States such as Lagos, Rivers, Imo, Ondo, Enugu and Kaduna State all recorded the highest gains in net full-time employment.
- Akwa Ibom, Rivers, Bayelsa state, Abia and Borno state all-state reported the highest unemployment rates in the quarter
- Also, Katsina recorded the highest underemployment rate alongside Katsina, Jigawa, Kaduna, and Yobe.
Unemployment was highest in the South-South Zone
There’re 5.38 unemployment people in the region– The NBS report shows that the South-South regional zone has a total of 16.7 million (second-largest) labour force in the country. It also has the highest unemployment rate of 32 percent in the quarter. This represents about 5.38m unemployed people in the region.
Further breakdown of the report shows that Akwa Ibom State recorded the highest unemployment rate of 37.7%, followed by Rivers State with 36.4%.
It should be noted that the labor force population of Akwa Ibom state increased by 300,163 in the last one year of the review period, while underemployed people also increased by 154,692 persons.
South West recorded the lowest Unemployment rate
The South West region of Nigeria has only five states which include Ekiti, Lagos, Ogun, Ondo, Osun, and Oyo. The NBS report shows that this region recorded the lowest unemployment rate of 14 percent.
Yet, Ogun and Lagos States are on opposite ends– Despite generally low unemployment rate in the South West, Ogun State’s unemployment rate still rose by 6.8 percentage. This is a sharp contrast when compared with neighbouring Lagos state which recorded the biggest decline in its unemployment rate; down by 3.7 percentage points.
Note that Lagos State had the highest labor force population of 7,47m person during the period need review, even as EKiti State had the lowest labor force population of 1,77m persons in the zone.
North West Zone recorded the highest underemployment rate in Nigeria
4.32 million persons are unemployed in the region– The Bureau’s report shows that North West Zone recorded the highest underemployment rate of 27 percent for the quarter under review. Note that the North West region has a total of 15.9 million labour force, out of which 4.32 million persons are underemployed.
Why is this so? – According to the NBS:
“States with higher focus on seasonal agriculture tend to have higher rates of underemployment compared to unemployment.”
Why it matters – Oil rich zones have the highest unemployment rates
From the analysis of the NBS report, the South-South States recorded the worst unemployment rate of 32 percent.
What are these states doing with their huge federal allocations? – As you may well know, the South-South States include: Akwa Ibom, Cross River, Bayelsa, Rivers, Delta, and Edo. Most of them are oil-producing states, all of whom receive quite a lot of revenue from the federation each month. According to the latest monthly allocation statistics data, four out of the six South-South States shared whooping N64.04bn. This represents 28.9% of the entire monthly allocation distributed by the Federation Account Allocation Committee (FAAC) for March 2019.
Akwa Ibom, for instance, received the second highest revenue allocation of N16.3bn from the Federal Government in just March 2019. It has repeatedly received fat allocations from the federation account, thanks to its status as an oil-producing state. Despite all that, it recorded the highest unemployment rate.
Any political will to end unemployment in the South South region? The important question, therefore, is – how do these states spend the billions of naira allocated to them on a monthly basis? Does Governor Udom Gabriel Emmanuel even have any concrete plans towards tackling the unemployment menace in his state?
With no intention to politicise this development, the truth remains that allocation figures for the oil-producing states simply do not reflect on their unemployment data. In other words, these states are doing very little it nothing to curb unemployment with the allocations given go them.
The unemployment numbers in South South states are as bad as they get. They also explain why criminal activities such as kidnapping and armed robbery are prevalent in these states.
Still for your consideration– These oil-rich states also access the 13 percent monthly derivation as oil-rich zones on a monthly basis. For March 2019, four South-South states of the nine oil-rich states shared whooping N42.8bn out of total N45.09 bn.
Why South West recorded the lowest Unemployment rate
The NBS unemployment statistics suggest that Lagos state and it’s South Western counterparts are doing something right which others grossly ignore. For instance, Lagos State added the highest labor force population of 7.4m as at the period under review.
To read the full unemployment report, download it here.
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Financial Services
Ratings agency, Moody’s reveals it is reviewing First Bank’s ratings
Moody’s explained why it might downgrade First Bank’s ratings.
Moody’s Ratings agency said on Thursday that it has put First Bank of Nigeria on review for a downgrade after the central bank sacked the board of directors and replaced them with new directors.
Moody’s made this statement in a report titled ‘Removal of Non-Executive Board Members Highlights Governance Shortcomings.’
In a quote, Moody’s said:
“Moody’s Investors Service, (“Moody’s”) has today placed all long-term ratings and assessments of First Bank of Nigeria Limited (First Bank) on review for downgrade. The review will focus primarily on an assessment of evolving governance considerations at First Bank, specifically corporate governance developments. The rating action follows the dissolution of First Bank’s board by the Central Bank of Nigeria (CBN), the bank’s primary regulator, on 29 April 2021. As a result of this action by the CBN, all the non-executive directors were removed while the executive management remained in place.”
The Governor of the Central Bank of Nigeria, Godwin Emefiele, had last week announced the sack of the entire board of directors of FBN Holdings Plc and its subsidiary, First Bank of Nigeria Ltd following the initial removal of its MD/CEO Dr Sola Adeduntan. Following his sacking of the board, he set up a new board for the bank holding company and its subsidiary and also reinstated Adeduntan as MD/CEO.
Moody’s mentioned that the regulatory actions demanded of First Bank by the CBN introduces a clould of uncertainty over the outlook of the bank. For example, the CBN had asked the bank to divest from its holdings in two listed companies while also recovering its loans from one of them.
“The review for possible downgrade reflects the rating agency’s view that the removal of all non-executive directors of the bank’s board by the regulator demonstrates corporate governance shortcomings and weaknesses in board oversight. The bank also needs to implement regulatory directives concerning the resolutions of loans to, and shareholding in non-banking related parties, which reportedly had not been executed in the recent past.
Moody’s notes that the outcomes of these developments are uncertain at this point, and the final and long-term governance, reputational and financial implications of the events for First Bank are also unclear.”
The central bank directive sacking the board of the bank also retained its executive management perhaps suggesting that the CBN had confidence in the ability of the MD and his team to manage the bank. Moody’s also noted this in its briefing.
“While the bank’s executive management team remained the same, the rating agency believes these developments could distract management’s focus on implementing the bank’s strategic plan and road to recovery. First Bank management’s immediate key target was to reduce nonperforming loans (NPLs) to levels comparable with domestic peers. The rating agency recognises that, in the context of asset risks, the bank took steps to reduce its stock of problem loans, with its reported NPL ratio falling to 7.7% at year-end 2020 from 25.9% in 2018.”
Will Moody’s downgrade First Bank?
The rating agency explained that the decision to downgrade will depend on how strong the bank’s corporate governance structure is and whether the CBN will impose additional sanctions. If any of these crystallizes, it could downgrade its ratings.
“The bank’s long-term deposit ratings can be downgraded if flaws in the bank’s governance systems exist, and if the CBN imposes additional sanctions on the bank, including, but not limited to, conditions to address any vulnerabilities that may be discovered. Financial output that is less than anticipated could also result in a rating downgrade.”
Moody’s, however, poured water on any optimism around a rating upgrade.
Given the review for downgrade and the pessimistic outlook on the government of Nigeria, there is a slim chance that First Bank’s ratings will be upgraded. Stronger solvency progress than currently reflected in the ratings, combined with a stabilization of the sovereign outlook, could result in the outlook being stabilized.
Why is rating important?
Corporate Organizations desire positive ratings because of the effect it has on their ability to raise capital as well as the cost of capital. A high credit rating typically attracts positive investor sentiments helping organizations tap the debt and equity markets, especially from institutional investors.
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