The Nigerian Bureau of Statistics (NBS) has reported an increase in the unemployment rate to 5.3% in Q1 2024, up from 5.0% in Q3 2023. The report highlights gender and geographical disparities, with male unemployment at 4.3% and female unemployment at 6.2%. Urban areas experienced a higher unemployment rate (6.0%) compared to rural areas (4.3%). Youth unemployment, though decreasing slightly to 8.4%, remains a critical issue. Educational attainment also plays a significant role, with unemployment rates varying from 2.0% among postgraduates to 6.9% for those with secondary education.
The survey also noted a decline in underemployment, which dropped from 12.2% in Q1 2023 to 10.9% in Q1 2024. However, the gender gap persists, with more women (12.5%) underemployed compared to men (8.5%).
On the same day, the Central Bank of Nigeria (CBN) raised the Monetary Policy Rate (MPR) from 26.75% to 27.25%, a move criticized by experts as detrimental to investment and economic growth. The increased interest rates are expected to exacerbate borrowing costs, potentially reaching over 35%, which could lead to increased bad debt in financial institutions and further economic contraction.
CBN Governor Olayemi Cardoso justified the rate hike as necessary to maintain economic stability amid rising inflation, which remains above 32%. He emphasized the need for sustained efforts to attract foreign investment and stabilize the exchange rate, while acknowledging the pressures on Nigeria’s working population. Despite a slight moderation in headline inflation in recent months, core inflation, driven by energy prices, remains elevated.
Experts and business leaders have expressed concerns over the impact of these policies, arguing that higher interest rates will stifle businesses, especially in the real sector. The Nigerian Association of Chambers of Commerce, Industry, Mines, and Agriculture (NACCIMA) and the Association of Small Business Owners of Nigeria (ASBON) warn that increased borrowing costs will hinder economic recovery, with businesses likely to downsize or close.
Looking ahead, the CBN remains optimistic about future foreign exchange inflows, particularly with the commencement of export activities from the Dangote Refinery. This is expected to ease pressure on the FX market, as petroleum products account for a significant portion of current FX demand.
The unemployment reality, as noted by analyst Ejike Nwuba, is believed to be far worse than the reported figures. He calls for urgent structural reforms to transform Nigeria from an import-driven to a production-oriented economy, citing China’s industrial growth as a model for success.