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Nigeria's Unemployment Rate Falls to 4.1% with New Methodology, Analysts Dispute Figures

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Nigeria's Unemployment Rate Falls to 4.1% with New Methodology, Analysts Dispute Figures

The National Bureau of Statistics (NBS) in Nigeria has reported a decline in the country's unemployment rate to 4.1%, the lowest in many years. However, analysts argue that this figure is an undercount due to the NBS's new methodology. The bureau now considers individuals working for at least one hour a week as employed, compared to the previous parameter of 20 hours per week. According to the NBS's latest labor force report, approximately three out of four working-age Nigerians aged 15 and above were employed in the first quarter of 2023. However, analysts believe that the updated methodology does not accurately reflect the true number of jobless individuals in Nigeria. Akintunde Ogunsola, a financial analyst based in Abuja, suggests that the actual unemployment rate in Nigeria may be higher than the 33% recorded in 2020. Many micro, small, and medium-sized enterprises have been forced to lay off workers or close down, contributing to the joblessness in the country. Critics of the new methodology argue that it fails to capture the reality of individuals who engage in sporadic work to sustain themselves, even if it is only for a few hours a week. They emphasize the need to revise the methodology to accurately reflect the employment status of these individuals. Muda Yusuf, the leader of the Centre for the Promotion of Private Enterprise, highlights the inadequacy of considering a one-hour job as meaningful employment. Many people in Nigeria struggle to make ends meet with such limited work opportunities. In conclusion, while the reported decline in Nigeria's unemployment rate seems promising, analysts contend that the figures do not fully represent the reality on the ground. A revision of the methodology is necessary to provide a more accurate reflection of the country's employment situation.

Impact of Nigeria's Unemployment Rate and New Methodology on New Businesses

The recent report by Nigeria's National Bureau of Statistics (NBS) indicating a drop in the country's unemployment rate to 4.1% may initially seem like a positive development for new businesses. Lower unemployment rates can suggest a healthier economy, potentially leading to increased consumer spending and business growth.

Methodology Disputes and Realities

However, the controversy surrounding the NBS's new methodology, which considers individuals working as little as one hour a week as employed, raises concerns. Critics argue that this approach fails to capture the reality of sporadic and insufficient employment, potentially painting an overly rosy picture of the economic landscape.

Implications for New Businesses

For new businesses, particularly those in the micro, small, and medium-sized enterprise sector, these disputed figures could lead to misguided business decisions based on inaccurate data. The potential for a higher actual unemployment rate suggests a more challenging economic environment, with less consumer spending power than the official figures might imply.
Need for Accurate Reflection
The call for a revision of the methodology to more accurately reflect the employment status of individuals underscores the need for reliable data in business planning and decision-making. Inaccurate unemployment figures could lead to overestimation of market size and consumer demand, jeopardizing the success of new businesses. In conclusion, while the reported decline in Nigeria's unemployment rate may seem promising, the dispute over the figures highlights the importance of accurate data for new businesses. The potential impact of these figures on business planning and strategy underlines the need for a more realistic reflection of the country's employment situation.
Story First Published at: https://financialpost.com/pmn/business-pmn/nigerias-unemployment-rate-falls-to-4-1-using-new-methodology-analysts-say-its-an-undercount
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