Unemployment Rate In Nigeria To Rise Above 40 Percent In 2023, Says Report

The unemployment rate in Nigeria increased by 37.7 percent last year and it will rise to 40.6 percent this year, as per the KPMG report.

The multinational consulting firm released a report, titled "KPMG Global Economy Outlook report, H1 2023," which mentioned how Nigeria will continue to face the unemployment challenge due to slow economic growth and new job seekers entering the market every year.

The report disclosed that unemployment in the country is expected to grow further in the country and become a major challenge in 2023.

"Limited investment by the private sector, low industrialization, slower than required economic growth and consequently the inability of the economy to absorb the 4-5 million new entrants into the Nigerian job market every year" are some of the reasons why these challenges are rising in Nigeria, Punch reported.

"Although the National Bureau of Statistics recorded an increase in the national unemployment rate from 23.1 percent in 2018 to 33.3 percent in 2020. We estimate that this rate has increased to 37.7per cent in 2022 and will rise further to 40.6 percent in 2023," KPMG mentioned in the report.

KPMG further noted that the government revenue will remain inadequate to support much-needed expenditures, which will lead to a high debt stock and high debt service payments.

It explained, "The Nigerian economy ended the past year with a GDP growth rate of 3.52 percent in Q4 2022, compared with 2.25 percent in Q3 2022, with growth averaging 3.10 percent over 2022."

The firm shared that if the country wants to grow by 3 percent in 2023, then they need to improve its telecommunications, trade services as well as oil sector.

"Growth in 2022 was driven by the non-oil sector, as continuous recovery in household consumption boosted spending, particularly in the finance and insurance services, telecommunications, and transportation and storage services," the report shared.

It continued, "While the non-oil sector grew by 4.84 percent, the oil sector contracted by 19.22 percent, largely attributed to worsening oil theft, pipeline vandalization, underinvestment, and other operational challenges inhibiting oil production. Accordingly, oil output (including condensates) declined from 2.07 million barrels per day in Q1 2020 to 1.34 million by Q4 2022."

Moreover, the firm claimed that the economic growth of the country would be negatively affected by the naira redesign policy, which was introduced last year and implemented earlier this year.

Under the currency redesign policy, three denominations were redesigned out of eight including N200, N500 and N1000. The new notes were launched on Nov. 23, 2022. Nigeria is also going through a major economic crisis since demonetization as it mopped over 70 percent of the liquid money.

"To combat rising inflation, the Nigerian Central Bank raised the monetary policy rate by a cumulative 500 basis points in 2022, to 17.5 percent, and increased the cash reserve ratio from 27.5 percent to 32.5 percent," the report mentioned. "However, despite these aggressive rate hikes, inflation has remained stubbornly high and is predicted to remain above 20 percent in 2023, due to the persistence of the structural and policy issues."

Earlier this month, the World Bank disclosed that the Nigerian currency naira lost 10.2 percent of its value last year.