The War of Nano, Bits and Bytes: Unemployment, Exacerbated

Today, in Nigeria, anyone with more than fifteen years of working experience, who loses a job in banking, telecom and oil & gas sectors will be very lucky to find new employment that pays similar wages and benefits. Being a largely poor country, Nigeria does not have much use of experienced professionals at the top of the management pyramid. A banker departs banking sector and not many other sectors can absorb that individual because few have capacities for the top-notch experience. Also, because of the size of the markets, the companies weed the pyramids so early. If 1000 people join the banking industry in a year, after 15 years, less than 20% will remain. There is a preference, over time, of using lower experienced people, and that pushes many experienced people out of the industry. This is not just in the banking industry; Nigerian military, the Police, etc all do the same.

What is happening is a redesign of  systems as a result of technology and productivity. You do not need too much experience to do a lot of things very well. So as you age with experience, you become expensive compared to a younger person who can effectively deliver that job at lower cost.

Indeed, Nigeria is undergoing a transformation that is breaking social systems from Kano to Lagos. Stock market crises, unpaid public sector salaries and series of other problems have seriously affected many key stakeholders, in both the private and public sectors, around the country. Everything has changed. Being a university graduate is not enough for a decent living wage. That seems to be the smallest denominator in Nigeria.

The Dislocation

Nigeria has a new normal: economic uncertainties until it can decouple its existence on petroleum. We are struggling with roadmaps on how to navigate out of the valley of spiraling economic difficulties. In this convoluted world with high level of interconnectivity, one economic problem leads to another. Nothing seems to be working in fixing the economy. Sure, the nation is making progress.

The national unemployment rate is rising and what used to be the problem of the uneducated citizens is creeping into the world of experienced professionals. Unfortunately, the rate is not going down anytime soon. Why? Besides the fact that our formal economy sector has not significantly expanded,  many other things are in play. As Elon Musk had noted, the future of human workforce will be challenged. We will have the  byte and bit workforce but that will be limited. Even before the expected disruption of AI, powered by supercomputers, to compete with humans, Nigeria is already seeing the impacts. Nigerian banking is seeing productivity owing to deployment of technology, from ATM to Mobile Banking, resulting to dislocation of workforce.

As technology penetrates, we will continue to experience displacement across all the key industrial sectors, at global level. We have already phased out the industry that hires special secretaries to work the typewriting machines. The ticket masters have been replaced by websites. Increasingly, apps and websites are offering professional counseling from finance to romance that humans used to do. A new generation of smartphones will displace the language interpreters, when we have mature language translators inbuilt in our phones. Today, an engineer equipped with computer aided design tools will do better than ten engineers a century ago.

In nearly all industries, technology is enabling firms to do more with lesser human power. Human productivity has consistently improved over the centuries and our standards of livings have correlated with it. However, while the industrial age technologies made sense of the factors of production of labor and land, the new age calls for knowledge. Through robotics and automation, hundreds of man-hours can be replaced with a simple machine that never asks for benefits.

For Nigeria, that maturity level is still far. If the country industrializes, we will expand our economy. That will create more jobs in the long-term. That should be our concern before we begin to think of displacement of labor in the long-term. Our challenge is making sure we can actually industrialize.

Digital Startups Will Not Save The Day

We all like our fintech. We like internet. Nigeria is going through the digital front. They are very critical. So, unlike the industrial economy, having more startups may not translate to more jobs, because in most cases those startups create technologies that eliminate more human jobs across the industries. You can run an Internet-only bank with 15 staff if you deploy AI, cloud and many other emerging technologies, at scale.

Specifically, for every one person that is hired in most Internet startups, a displacement could result to, at least, loss of two jobs across all sectors. When ten parents decide to use a website to help their kids improve their mathematics skills, part-time teachers are displaced. When a big bank opens a web portal that enables customers to make informed decisions, financial planners will be cut. In general, who needs a stock picker, when most websites offer quality analyses free? Our society is changing, and people and firms must give things free to compete. That is why websites that require subscriptions are seldom popular.

This is a global redesign and it is very important that policymakers understand that what worked in 1960 may not necessarily work now. Information is moving fast and the reaction of the consumer is spontaneous. They are being rewired through online communal ties resulting to new patterns of lifestyles.

Nevertheless, what we are seeing today is just the beginning. The future of the African continent is one where many people will be unemployed unless we can do what other advanced economies did: industrialize at scale. This is besides any effort to digitize. We will continue to innovate, digitally, however, that will not create enough jobs to change the trajectory of continental unemployment rate. Our efforts on digital are ephemeral with no core industrialization component. Unlike the advanced nations, we are not connecting into the transformation of industries. We are simply seating on vapors of imaginations. Those will work, but they will not produce scale that will put millions to work. Anyone that tells you that more farm apps and websites will create more farming jobs over industrialization of agricultural systems (e.g. processing of farm output) is not honest. But funding apps makes us feel good. That is unfortunate.

The biggest crisis is coming. It will come when nanotechnology would have matured from lab to the market. First, it will help displace millions of cotton, rubber and agricultural workers across the globe when engineers can make these devices in the lab. They can hire fifty people to produce the same quantity of cotton one million people produce in Sudan. They will displace those workers and clusters of wars would take place across the developing world.

There would be unprecedented cycles of revolutions as unemployment increases. Commodity market will morph into technology market and millions will lose heritage and culture because human innovation has disrupted them. I have called this the ‘war of nano’.

As we indulge and celebrate the innovations we witness everyday in technology, it is important to note that nothing like this has ever existed. A man can become a media company, without a distribution network and the delivery men. A company can exist entirely on Internet, cutting off all the real estate professionals. A bank that used to employ 5000 staff could use 60 people because it has modernized its infrastructure. Technology is competing with us and we are losing the battle.

Yet, most governments seem not to understand what is going on. When you continue to measure the characteristics of the knowledge economy with the tools of the industrial economy, the world cannot be governed right. Pushing government funds to create startups and new companies in the hope of reducing unemployment could be fallacious. This is not an industrial age new companies that hire in legions. The best companies work to eliminate head counts with the powers of microprocessors. From US to UK, human productivity due to technology has accelerated faster than job creation and the old labor equilibrium distorted.

It will be hard for any government policy to radically change the structure of labor in the long-term since daily we are encroaching into new territories with new technologies. The launch of Google created millionaires, but also crushed many industries. Sure, it created new industries, but those employ fewer workers, in average. It looks so evident that the cinema, bookstores and all those traditional networks that employ humans will be completely replaced with websites in the near future. Unfortunately, the business model of internet is knowledge-based, requiring few skilled workers. Unlike the factory model, it takes just a few to run those companies. But for most industrialized countries, this balances out. They can have these firms and still create jobs because they have resilient anchors: the infrastructures. That is different in Africa.

The Opportunity

Nigeria needs to understand that increased productivity and technology penetration will change our labor model, forever. Now is the time to begin that process of designing systems to manage our society. We must change the way students are trained and educated.

Our present education model is job-centric: the brightest students expect to be hired. That is why most companies are not created by the valedictorians and best students, but middle of the pack who struggle sometimes to get good jobs. The former gets accelerated corporate infusion and they rarely have to create new firms. With getting job in mind, our education loses the very purpose of education: the liberation of the mind. Until we change that paradigm to enable students get mental and entrepreneurial readiness, many will be unemployed. The truth is that anyone with skills, in anything, has a big market to succeed today than ever. Focusing on that element of personal discovery will help students prepare to graduate in a society of fewer jobs and prosper.

Globally,  governments must modernize those industrial age tools they use to track unemployment. There are thousands across the developed world that make decent livings on web ventures, yet are classified unemployed because no one has developed the right tools to capture the ‘informal Internet labor’. Technology makes it possible for people to build personal wealth in Beijing while living in San Francisco, and technically classified unemployed. This supports my notion that lack of quality data is affecting government ability to develop a strategy to reduce unemployment since most of the ‘unemployed’ people are working. That technology that displaces jobs through higher productivity can also help improve government statistics.

For Nigeria, we need to focus more on the industrial systems because the idea that we can leapfrog bad roads, inadequate electricity, and good education is an illusion. No website, no matter how dynamic can fix that. Besides supporting digital companies, the government must ensure it has a plan to deepen our meatspace companies that build the core infrastructure. A vision that will make government to understand that funding a postal system will be more catalytic than giving grants to e-commerce startups which will surely struggle without a functioning postal system.

Now is the time: we must create opportunities at the top, by expanding our economies. We can win the war of nano, bits and bytes, if we prepare well.

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