Nigeria’s unemployment rate is expected to take a new turn in 2023, rising further to 40.6 percent, according to an economic report by KPMG.
The fourth quarter report of the National Bureau of Statistics (NBS) for 2020 had put Nigeria’s unemployment at 33.3 percent, while in the past two years; the nation has recorded further dip in job losses amid sluggish economic growth and influx of fresh graduates into the labor market, pushing the figure up.
KPMG In its report titled; ‘Global Economic Outlook’, said the resulting consequence of the slow economic growth will be an increase in the unemployment figures. The NBS has not published the unemployment rate since 2020, but KPMG estimates that the rate has increased to 37.7% in 2022 and will rise further to 40.6% in 2023.
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“Unemployment is expected to continue to be a major challenge in 2023 due to the limited investment by the private sector, low industrialization and 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,” KPMG said in the report.
“Although lagged, the National Bureau of Statistics recorded an increase in the national unemployment rate from 23.1% in 2018 to 33.3% in 2020.
In the report, KPMG projected that Nigeria’s gross domestic product (GDP) would continue to grow at a relatively slow pace of three percent in 2023, citing slowdown in economic activity that typically characterizes periods of political transition in Nigeria.
Per the firm, the spillover from an expected slowdown in the global economy and its trade and financial flows implications are likely to drag on the country’s GDP. It added that key non-oil sectors such as manufacturing, trade, accommodation, food services and transportation would be negatively affected by the naira redesign policy introduced by the Central Bank of Nigeria (CBN), further slowing down overall GDP growth in 2023.
“Nevertheless, we expect telecommunications, trade services, as well as an expected recovery in the oil sector, on account of measures being taken to tackle security issues, to drive our forecast of 3% growth in 2023,” the firm said.
Nigeria’s economic trajectory has significantly shifted amid decline in oil revenue, forcing the government to introduce a new tax regime as a way of augmenting revenue generation from the non-oil sector – which has served as the country’s economic cash-cow as the oil sector took a downturn.
In addition to slow economic growth, the government is grappling with the burden of fuel subsidy payments, which it has in recent times, been borrowing to upset. Though the federal government has set a mid 2023 timeline for the total removal of the subsidy, there is no clear path to it.
The fuel subsidy gulps a significant percent of Nigeria’s annual budget. While its removal in June will save the government a whopping amount of money, it will likely result in social-economic unrest.
KPMG projected that the incoming administration would face a deeply rooted challenging environment characterized by fragile and slow economic growth and challenges in the foreign exchange market. It added that government revenue remained inadequate to support much needed expenditure, leading to a high debt stock and high debt service payments.