The World Bank has identified the creation of “productive jobs” as a crucial step for Nigeria to reduce its escalating poverty rates, according to its latest Nigeria Development Update October 2024 report titled “Staying the course: Progress amid pressing challenges.”
The international financial institution emphasized the dire situation, stating, “Without jobs, poor Nigerians will not be able to escape poverty. More than half of the population lives in poverty.”
This assessment reflects both the modest pace of economic growth and its failure to offset inflation’s erosion of purchasing power.
The report highlights a critical disconnect in Nigeria’s economic structure, noting that even during periods of stronger GDP growth in the early 2010s, the benefits primarily accrued to wealthier households. With Nigeria’s young and growing population, the Bank stresses the urgent need for jobs that can harness the country’s potential “demographic dividend.”
However, the report cautions that mere employment isn’t sufficient to lift people out of poverty. A concerning paradox exists where high employment and high poverty coexist, with many jobs failing to generate adequate earnings for poverty escape.
The Bank observed, “In work poverty is common as many jobs do not generate earnings that are high enough to escape poverty. Low incomes are symptomatic of low productivity jobs.”
The analysis reveals a shifting labor market landscape, with employment moving from agriculture to services. Yet, this transition isn’t translating into increased productivity or improved living standards because “many of the new service-sector jobs are in low-productivity sub-sectors like retail and wholesale trade.”
Particularly concerning is the scarcity of wage jobs, with the report noting that “Just 13.6 percent of employed Nigerians are primarily engaged in wage work.”
The Bank advocates for a comprehensive approach to address this challenge, emphasizing the need for:
Macro-fiscal stability, enhanced private sector development, improved market access, increased trade openness, better business environment, investment in human capital development
For immediate relief, the Bank recommends policies to boost productivity in farm and non-farm household enterprises.
These enterprises, typically small-scale and family-operated, require:
Access to basic infrastructure, improved input accessibility (tools, fertilizer, climate-resilient crop varieties), better access to finance, enhanced market access for commercialization.
The report places special emphasis on policy initiatives for women and youth, noting their limited access to productive jobs.
“For Nigeria’s vast youth population, policies to support skills and job matching, manage external migration including by helping young emigrants reach destination countries that seek their skills, and provide fallback employment including by ensuring that public investments consider job creation potential can help improve access to productive jobs,” the report stated.
The Bank cautions against over-reliance on policies focused on formalized wage workers, including public sector jobs and minimum wage legislation, as these reach only a small segment of Nigeria’s poor population and can be fiscally burdensome given the large share of formal public sector workers.
