Nigeria will need to create 5 million new jobs yearly over the next ten years to prevent an increase in the unemployment rate, IMF experts said in a recent report.
According to the document, this figure includes the growing number of young people entering the labor market each year. With more than 201 million people registered in 2019, Nigeria is the 7th most populous country in the world and the 1st in Africa.
Like other countries on the continent, this West African nation concentrates a large majority of young people who do not always operate in the formal labor market. The situation has worsened with the covid-19 pandemic, which made many people lose their job around the world.
IMF experts encourage Nigeria to improve reform efforts to offer real opportunities to the youth. In recent years, the country’s economy has shown signs of recession, shrinking by 1.6% in 2016, then 4.2% in 2020 after recovering by 2.2% in 2019. “Nigeria’s export structure has not fundamentally changed over the decades, with hydrocarbon products still accounting for 90 percent of the country’s exports today as they did in the 1970s” the document says.
To improve economic prospects and the response to unemployment, the IMF calls on the Nigerian government to implement economic reforms to diversify the economy while improving domestic resource mobilization to enhance investment in key sectors of the economy.
“A large share of revenues is spent on the country’s public debt service payments, leaving insufficient fiscal space for critical social and infrastructure spending and to cushion an economic downturn. In this context, mobilizing revenues through efficiency-enhancing and progressive measures is a top near-term priority” the IMF recalls.
“Revisiting tax exemptions and customs duty waivers, increasing and broadening the base for excise taxes, developing a high-integrity taxpayer register, enhancing digital infrastructure, and improving on-time filing and payment are important measures” it added.
According to the institution, Nigeria has one of the lowest income levels as a percentage of world GDP. Once the post-covid-19 economic recovery is well underway, IMF says, Nigeria must increase the value-added tax rate to at least 10% by 2022 and 15% by 2025 (the average for the countries of the Economic Community of West African States), to create an efficient fiscal space.