Economy of Nigeria and Its Impact on Workforce
Nigeria is country that heavily relies on agriculture. It is also characterized by a mixed economy and a developing market. From 2014, Nigerias economy is one of the largest economies in Africa. The country has huge reserves of natural resources, the stock exchange, and well-developed financial, law, communication and transport segments. The oil industry is the leading branch of Nigerian economy. A high level of inflation, at the same time, prevents stabilization at the macroeconomic level. Being one of the largest worlds oil suppliers and the main trading partner of the United States and Western Europe in Africa, Nigeria has a lower middle income status. The serious crisis of the Nigerian economy caused by the unstable political situation in the region, terroristic attacks, shadow business, corruption, low rate of agricultural sector, and falling oil prices that bring most of the countrys export earnings aggravates a high level of poverty and unemployment. The country has been experiencing this issue for years.
The Formation and Development of Nigerian Economy Based on the Oil Industry
Since Nigeria gained independence from Great Britain in 1960, the dynamics of the countrys economic development was determined by the extensive industrial growth of hydrocarbon resources and the decline in agricultural production. Nigerias economy was struggling to strengthen the countrys wealth in fossil fuels to overcome poverty, which affected a major part of the population. Most importantly, in 1971, Nigeria became a member of the OPEC (Arobani). The rapid growth of world oil prices has ensured the steady development of Nigerias strategic oil and gas sector, as well as the fast replenishment of the countrys monetary and financial reserves. In 2005, Nigeria markedly advanced when it entered into an agreement with the Paris Club to liquidate its debt. Under the agreement, Nigeria repaid its debt with a discount of approximately 60% (Odulary). Nowadays, the country is one of the largest worlds oil producers and exporters. Oil exports bring over 90% of the countrys entire foreign exchange income (Soriola). In terms of the pace of oil industry development and the level of capital investments, Nigeria occupies one of the top places in the world. The main trading partners are the USA, Great Britain, France, Spain, and Germany (Arobani). What is more, the country under analysis actively promotes cooperation with such countries as China, India, Japan, and South Korea. After years of crisis, Nigeria managed to stabilize the economy by 2014 and became one of the largest economies in Africa. It was expected to become one of the top 20 economies in the world (The Report: Nigeria 2017). Oil industry, foreign direct investments, and high economic development created jobs in diverse segments including marketing, building hospitality, and manufacturing.
The Economic Crisis of Recent Years
Since Nigeria directed all its efforts to develop oil production and became to rely greatly on it, previously powerful agricultural and light manufacturing industries suffered the lack of proper care. In 2015, the economy rapidly began to decline. The oil prices have fallen from more than $100 per barrel in 2015 to approximately $50 per barrel in early 2017 (The Report: Nigeria 2017). In the Niger Delta oil production region, the conflict that has started in the 1990s between government troops, mercenaries of oil companies, and ethnic groups continues to wreak havoc on the Nigerian oil sector. In 2016, the economy of the country lost up to 100 billion US dollars from militants attacks on oil pipelines (The Report: Nigeria 2017). In addition to the losses caused by the decline in oil production and the cost for rebuilding oil pipelines and drilling rigs, the instability in oil areas has resulted in smaller investment in the Nigerian economy. Furthermore, the World Bank estimated that due to the corruption hindering the development of the economy and infecting Nigerias business, 80% of energy revenues benefit only 1% of the population (Odulary). The anti-corruption campaign of Nigerian government has proved to be disappointing. The unstable political situation in the country, corruption, falling oil prices, and a decrease in the production of black gold due to militants attacks on oil infrastructure objects have led to the great recession. In early 2016, the Central Bank of Nigeria has cancelled the dollar peg to attract investments to the country that could support the economy (The Report: Nigeria 2017). Liberalization of the foreign exchange market caused the devaluation of naira. The sharp shortage of currency led to the fact that Nigerian importers, who have nothing to pay their suppliers, were forced to reduce staff or close enterprises. Low labor costs saved many Nigerian factories from the closure. The minimum wage is about N20, 000 that is $56 at the rate for October 2017 (The Report: Nigeria 2017). The authorities rushed to better develop infrastructure including the construction of new roads, railways and ports, and the modernization of energy generation to stimulate the creation of new jobs.
Opportunities Provided by Agricultural Sector
The agrarian industry has huge untapped potential. Before the oil industry became the main source of economic growth and export revenue, agriculture was the main currency earner in Nigeria (Soriola). Cocoa, cassava, and yams play a significant role in the countrys commodity exports. Notably, the country in question belongs to one of the most important manufacturers of cocoa products in the world. Steady demand for Nigerian cocoa on the world market is primarily caused by its special taste qualities. In addition, Nigeria is rich in beans, sesame, cashew nuts, peanuts, corn and palm oil, bananas, rice, and sorghum. Moreover, the country has the largest amount of poultry and horned cattle in Africa.
Despite the fact that the vast majority of the economically active population are employed in agriculture, the industry has been in deep decline for years, having lost its capacity to sufficiently supply the population with food and other products, as well as to produce commodities for export bringing the country great foreign exchange profits. The inadequate system of land use hampered the agricultural production. There are practically no large modern agricultural companies in the country. While retaining common land property, which is complicated by the existence of feudal remnants in the northern part of the country, the basic manufacture is concentrated on small farms. Moreover, bad marketing practice along with low soil fertility, poor irrigation, and the use of fertilizers led to the low level of purchasing prices for agricultural products.
Owing to the rapid decline of oil industry and economical fall over recent years, the redevelopment of agrarian production and exports is among the governments priorities. Today farming is one of the ways to maintain economic stability in the country. According to the report on the last quarter of 2016 prepared by Oxford Business Group, the farming industry contributed 26% to real GDP, which means that it became one of the major sources of the countrys economy (The Report: Nigeria 2017). Nigerian government launched a massive campaign for achieving full self-sufficiency in agricultural products and expanding the volume of its exports as well as to encourage people to consider farming as a career option.
Services and Manufacturing as Spheres of Employment
The country has a well-organized system of financial services that includes brokerage firms and insurance bureaus, local and international banks, asset management companies, investment banks, as well as private equity funds. The authorities have recently started to expand the communications infrastructure. Large operators of the emerging market like MTN, Etisalat, Zain, and Globacom are the most profitable centers in the country (Soriola). Nigeria has a space satellite, the work of which is controlled by the National Space Agency for Research and Development headquartered in Abuja (Soriola). In addition, the country produces automobiles for French automaker Peugeot and for English trucks maker Bedford which is controlled by General Motors (Soriola). Moreover, Nigeria has some electronic manufacturers. Zinox Technologies Limited is a large producer and distributer of computers and computer hardware in Africa (Soriola). There are promising enterprises producing leather and textile in the country in question. Nigerian industries create good opportunities for the workforce but require solid professional knowledge.
Having great influence on the total production, human capital is an important factor for the countrys wealth. Technological progress can provide more efficient manufacturing methods like machines and computers, but skilled labor is necessary to manage and develop them, as well as to improve the quality and productivity of existing labor. Therefore, if Nigeria wants to be competitive in the near future, the growth of the countrys human capital is very important in future. Nonetheless, it is still a difficult issue for the country under analysis. In accordance with Human Development Index providing a measure of human capital development by income, health, and education, Nigeria is placed 152 with a value of 0.527 among 187 countries (Human Development Reports). This is because the workforce constitutes approximately a third of the total population of the country (Workforce Development & Youth Employment in Nigeria). Less than a half of the population have completed primary school owing to the lack of more promising educational opportunities (Workforce Development & Youth Employment in Nigeria). All this led to a shortage of skilled labor and became one of the main problems for both investors and the government. There is a rising import of foreign employees in Nigeria due to the local residents lacking necessary skills. The labor of workers from neighboring countries is used in several sectors such as trade, timber processing, and construction (Workforce Development & Youth Employment in Nigeria). The Government of Nigeria encourages the official export of labor services in order to improve the living conditions of people, increase professional skills, absorb unused labor, and increase the countys revenue. Moreover, Nigerian administration had launched programs for youth aiming to address the skills deficit and support the countrys economic growth.
During the years of independence, the significant changes have occurred in the structure of Nigerias economy, which resulted in a decline of agriculture and the rapid growth of the oil industry. Thus, industrial development of oil fields has changed the specialization of Nigeria in the international division of labor from agrarian to mineral raw materials. Oil is the main export product of Nigeria. Nevertheless, this does not improve the countrys position in the system of the international division of labor. Nigeria is struggling to stabilize its economy and overcome the crisis. Meanwhile, there is a shortage of qualified personnel caused by the unstable situation in the country, poverty, and frequently insufficient level of education.