KPMG report forecasts that Nigerian unemployment will rise to over 40% this year

ACCOUNTING giant KPMG has revealed that Nigeria's unemployment rate rose to 37% during the course of 2022 and will further rise to 40.6% this year due to the continuing inflow of job seekers into the job market.

In a newly released report tagged KPMG Global Economy Outlook, the multinational consultant firm said unemployment will continue to be a challenge due to the slower-than-required economic growth. Also, Nigeria suffers from the inability of the economy to absorb the 4m to 5m new entrants into the job market every year.

“Unemployment is expected to continue to be a major challenge in 2023 due to the limited investment by the private sector, low industrialisation and slower than required economic growth and consequently the inability of the economy to absorb the 4m to 5m new entrants into the Nigerian job market every year. Although the National Bureau of Statistics recorded an increase in the national unemployment rate from 23.1% in 2018 to 33.3% in 2020, we estimate that this rate has increased to 37.7% in 2022 and will rise further to 40.6% in 2023.”

“Additionally, government revenue remains inadequate to support much-needed expenditure, leading to a high debt stock and high debt service payments. The Nigerian economy ended the past year with a GDP growth rate of 3.52% in the fourth quarter of 2022, compared with 2.25% in the third quarter of 2022, with growth averaging 3.10% over 2022,” the report read.

It added that in 2024, Nigeria's unemployment rate will grow to 43% while inflation will accelerate to 20.3% in 2023 and 20% in 2024. Also, KPMG further noted that the incoming administration will face a challenging environment, characterised by fragile and slow economic growth and challenges in the foreign exchange market.

KPMG  projected recovery in telecommunications and trade services, as well as an expected recovery in the oil sector on account of measures being taken to tackle security issues, to drive the forecast of 3% growth in 2023. It added: “Growth in 2022 was driven by the non-oil sector, as continuous recovery in household consumption boosted spending, particularly in the finance and insurance services, telecommunications, and transportation and storage services.

“While the non-oil sector grew by 4.84%, the oil sector contracted by 19.22%, largely attributed to worsening oil theft, pipeline vandalisation, under-investment and other operational challenges inhibiting oil production. Accordingly, oil output, including condensates, declined from 2.07m barrels per day in the first quarter of 2020 to 1.34m by the fourth quarter of 2022.”

It also noted that the expected fuel subsidy removal and the 2023 fiscal bill would also mount pressure on domestic prices in 2023. KPMG further said that growth was set to be driven by the continuous recovery in household consumption, sustained performance of the non-oil sector and a recovery in oil production.