Plans by the Nigerian government to rejuvenate its country’s mining sector – and its economy in general ‒ may well be key to helping bring its population out of poverty.
According to the World Bank Group (WBG), despite having the largest economic base and populace in Africa, Nigeria offers limited working opportunities to most of its citizens.
Weak job creation and entrepreneurial prospects stifle the absorption of the 3.5 million Nigerians entering the labour force every year, and many workers choose to emigrate in search of better opportunities.
The country’s poverty rate is estimated to have reached 38.9 per cent in 2023, with an estimated 87 million people being affected.
As a result, Nigeria has the world’s second-largest poor population after India.
Furthermore, weakened economic fundamentals saw the nation’s inflation rate reach a 24-year high of 31.7 per cent in February this year.
The Bola Ahmed Tibu-led All Progressive Congress Party, which was elected in 2023, has stuck to a mining roadmap put in place by the government in 2016. It is looking to have the country’s minerals sector contributing to its gross domestic product (GDP) by 3 per cent in 2025.
Suppose the macroeconomic reforms ‒ planning to deal with insecurity, smuggling, state and federal government tax alignment, illegal mining, weak value adding, a low level of mechanisation and inadequate funding ‒ don’t work. In that case, however, it has been projected that this GDP figure will only be 0.34 per cent.
In a report written by WBG economists Jonathan Lain and Utz Pape in March, it was pointed out that the overall type of work the Nigerians did, be it under a wage regime or via self-employment, was strongly associated with poverty.
“Those holding wage jobs are far less likely to be poor,” the pair pointed out.
“However, wage jobs are scarce in Nigeria. Only around 15 per cent of employed Nigerians engage primarily in a paid wage job or an apprenticeship.
“More education certainly helps to obtain wage work, but offers no guarantee ‒ less than half of Nigerian workers with post-secondary education manage to get wage jobs.
“Not only does the nature of the job matter but also how many hours one can find work.
“Many employed Nigerians cannot get enough hours of work to meet their income needs. Around 13 per cent of employed Nigerians work less than 40 hours per week but are willing and able to work more ‒ they are underemployed.
“While nearly one quarter of employed Nigerians take on secondary jobs to supplement incomes, many others are not able to find a secondary job.”
Summarising African country’s labour market, Lain and Pape noted that underemployment and lack of wage work or other high-quality jobs were far more widespread issues than unemployment.
Although education helped, it was no guarantee for a good job and the skills that firms needed, but which workers could provide, may be mismatched.
“Rather than just creating more jobs, Nigeria needs policies that can support firm growth to expand wage jobs, build productivity in farm and non-farm household enterprises (as well as mining) and help match the skills of school leavers with those that the economy needs most.
“Tracking job quality and productivity provides more lucid policy focus than simply seeing what happens to the unemployment rate.”
In its report on the Nigerian mineral sector released in the second half of last year, international business consultant PwC said the country’s mining industry must demonstrate its commitment to addressing environmental, social and governance (ESG) issues in all aspects of its operations, while also recognising the associated risks and opportunities.
By doing so, participating miners could deliver long-term benefits to governments, shareholders, workers and the communities in which they operated.
“Companies that proactively respond to these emerging trends tend to perform better financially,” the consultant noted.
“In a previous study, PwC found that mining companies with higher ESG ratings outperformed the overall market during the peak of the COVID-19 crisis.
“These companies achieved an average total shareholder return of 34 per cent over the previous three years, surpassing the general market index by 10 per cent.
“This demonstrates the positive correlation between strong ESG practices and financial success.”