Construction, Manufacturing Sectors Key To Job Creation In Nigeria – Report

Leading Media research and data analytics organisation, Dataphyte has released its maiden Dataphyte Advisory Note titled “the Nigerian post-oil Economy Advisory Note.

The document focuses on helping Nigeria achieve better economic development and bridge economic gaps inclusive of gaps in the labour sector by tapping into consumer demand led interventions especially in the housing sector.

According to the report, Nigeria’s unemployment rate currently sits at 33.3% according to the Nigerian Bureau of Statistics, the country has 23.19 million unemployed persons. Out of this number, about 18.6 million or approximately 80 per cent do not have post-secondary education.

Added to the unemployment challenge, Nigeria has continued to battle with debt servicing and public debt. The report observed that with the country spending 98% of its revenue in 2020 (N3.34 Trillion) on debt servicing, there is a huge fiscal challenge and one that hampers sectorial developmental efforts.

Furthermore, the country has tried to explore other alternatives to deficit financing. Modalities such as monetisation of government assets and properties have been mulled, although that may be hard to come by as valuation of government assets is not currently favourable and as such selling assets may not be desirable. 

The report also noted that the economic challenge is currently affecting the ability of Nigerians to meet their needs with unemployment leading to low purchasing power and increasing poverty. For instance, it stated that “willingness of consumers to buy a product or service is strongly linked to the level of income and level of aggregate income is tied to the level of aggregate employed people”.

The report explained that the structure of Nigeria’s labour force is key in considering interventions to ease the current challenges of unemployment and bridging the resource gap.

“It is thus critical that we consider the structure of Nigeria’s labour force while determining the production sector to best direct government financial interventions” the advisory note read.

The report then urged concentration on the manufacturing and construction sectors.

The note reads in part; “Prior to the Oil boom of the 1970s, manufacturing contributed approximately to Nigeria’s economic output. Today, the share of manufacturing in GDP and employment are both lower than what would be expected. Manufacturing activities as a percentage of GDP in South Africa, Egypt and Tunisia is 11.76%, 16.28% and 14.28% respectively”

It was further stated that Nigeria can get more value by looking at key economic opportunities in cement, wood and wood products, basic metal, Iron and Steel, electrical and electronic and non-metallic products sub-sector of manufacturing activities. These sectors, the report stated, hold significant promises.

“Boosting demand for the products from these sectors could indeed rub off on other economic activities and improve Nigeria’s manufacturing output. It is thus instructive to look closely at the market for the products.” the research and data analytics organisation noted.

Government intervention is also projected to boost construction-related spending in the short to medium term. This is because the products listed above are most relative in the construction sector.

The report noted that while Nigeria budgeted  N2.72 trillion for construction-related activities in 2018, the government spent N744 billion of the sum, with about 42 percent concentrated around the construction of roads and railways. 

Even in 2019, when the government budgeted N2.99 trillion on the ‘Built Environment’, they spent less than a third of the sum- N887.3 billion.

Noting the disparities in the budgeted amount and actual spendings, the report opined that the construction sector, if well managed and invested in, can create jobs for many Nigerians with little or no education.

The advisory further stated that with the plan to close the infrastructure gap in thirty years;  and construction heavy activities like roads, rails, residential buildings, hospitals, sidewalks, and school buildings, such investments could lead to full-time employment in the construction sector.

“Given that 60 percent of the investment in a construction heavy industry could potentially go directly into the purchase of construction input like aggregate, cement, wood & wood products, basic metal, iron & steel, electrical & electronics and non-metallic products subsectors, such investment could potentially create millions of indirect jobs in the manufacturing, logistic and mining sub-sector in the short to medium term,” Dataphyte said in its report.

Citing an instance of China, it suggested that Nigeria can make maximal benefit from the construction sub-sector. In sectors such as manufacturing and construction, creating one job would lead to creating an additional 3.

The Dataphyte Advisory Note focusing on economic diversification with a focus on construction and manufacturing is timely, especially at a time when Nigeria is seeking solutions to its chronic economic challenges and increasing unemployment and underemployment figures.