On 14 August, the National Bureau of Statistics published unemployment figures for the first time in almost two years. Following another (small) devaluation of the official exchange rate in July and the removal of the fuel subsidy, the publication of the rather embarrassing unemployment stats suggests that pressure from international donors is forcing the cash-strapped administration to embark on an uneven reform path. Nevertheless, this is unlikely to extend to the core of President Muhammadu Buhari’s economic agenda, which remains focused on the rather unproductive agricultural sector with the aim to achieve ‘self-sufficiency’ via state-led investment and restrictive trade policies.
Official unemployment rose to 27.1% in Q2-2020, up from 23.1% in Q3-2018. Additionally, 28.6% (20.1% previously) of the workforce were classified as ‘underemployed’, i.e. working less than 40 hours a week. Combined, this means that the labor potential of 55.7%, i.e. some 45mn people of working age, remains underutilized. In absolute figures, this represents a whopping increase of 5.6mn people compared to the last reading from October 2018. Back then, about six months ahead of Buhari’s re-election in 2019, the statistics office had stopped the publication of unemployment figures due to a lack of funding. In fact, while Buhari had promised the creation of three million jobs annually, by the time of his re-election, unemployment had more than tripled since he assumed office in 2015.
The release of new data now can thus be regarded as another concession to international donors that are likely tying further support to cushion the economic effects of the Covid-19 pandemic on the provision of reliable data as well as tangible reform commitments. In fact, after obtaining USD 3.4bn from the IMF’s Rapid Financing Instrument (RFI) in April, Nigeria is still negotiating to unlock another USD 3.5bn for project financing from the World Bank and the African Development Bank (AfDB).
Furthermore, the Petroleum Products Pricing Regulatory Agency (PPPRA) raised its monthly pricing ‘guidelines’ for August by NGN 6 per liter of fuel, in line with an uptick in global oil prices. As the agency continues to adjust its guidance prices for retailers according to global price movements, the government appears committed not to reinstate the costly fuel subsidy abolished earlier this year.
However, there are still limits to Nigeria’s willingness to bow to pressure from multilateral financial institutions. For instance, while the Central Bank of Nigeria (CBN) devalued the official exchange rate by 5% in July, it stopped short of unifying the multiple exchange rate regime, as it had suggested in the government’s letter of intent to the IMF. Meanwhile, the CBN added corn to a list of items that are deemed ineligible to be imported using foreign exchange obtained from the central bank. This ‘import ban’ list was introduced in 2015 to curb foreign exchange demand and has remained in place despite repeated calls from the IMF for its removal.