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Rising inflation, interest rates threaten jobs market recovery

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Rising inflation, interest rates threaten jobs market recovery

Rising inflation, interest rates threaten jobs market recovery

Rising inflation, interest rates threaten jobs market recovery.

The continued increase in the general prices of goods and services, coupled with the recent hike in the key interest rate, could dent the gradual recovery of jobs in Nigeria’s labour market, analysts say.

As at the fourth quarter of 2020, Africa’s biggest economy recorded an all-time unemployment rate of 33.3 percent, which was intensified by the COVID-19 lockdown measures, according to the National Bureau of Statistics (NBS).

But there are expectations that unemployment numbers may have reduced slightly due to full reopening of economic activities last year.

“Even though there is no recent data on the labour market conditions for last year, it could be safely inferred that employment conditions improved on the back of a surge in business activities across sectors,” Temitope Omosuyi, investment strategy analyst at Afrinvest Limited, said.

He said the trend might hit a snag in 2022, “no thanks to the heightened high cost of doing business following the spike in energy prices which would no doubt impair the fragile labour market.”

Muda Yusuf, chief executive officer at Centre for the Promotion of Private Enterprise, said the high cost of goods and services, including energy cost, have serious macroeconomic effects on companies, especially for Small and Medium-scale Enterprises (SMEs).

“SMEs account for a large number of employment. So, when they feel this kind of shock, it will get saturated into high unemployment numbers,” Muda said.

According to the NBS, Nigeria’s Consumer Price Index, which measures inflation, surged to 16.82 percent in April, the highest in eight months compared to 15.90 percent in the previous month.

The month-on-month percentage increase (1.76 percent) is also the highest since May 2017. The surge in prices is as a result of rising energy (diesel) costs caused by the ongoing Russian-Ukraine crisis.

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The surge in inflation rate led to the recent hike in Monetary Policy Rate (MPR) by the Central Bank of Nigeria’s Monetary Policy Committee to 13.5 percent from 11.5 percent, the first hike since July 2016.

The key rationale for scaling the MPR stems from the need to curb the rising rate of inflation.

“This will exacerbate the intensity of idle capital assets, worsen the already declining profit margin of private businesses and heighten the mortality rate of small businesses,” said Segun Ajayi-Kadir, director-general of Manufacturers Association of Nigeria (MAN).

Ajayi-Kadir said that it would reduce capacity utilisation, and upscale the rate of unemployment, incidences of crime and insecurity as the capacity of banks to support production and economic growth would be heavily constrained.

Last year, the NBS reported that 20 percent of the full-time workforce in Nigeria lost their jobs due to the pandemic in 2020.

According to the report, the pandemic affected the nation’s workforce and caused an increase in the unemployment rate, from 27 percent to 33 percent between Q2 2020 and Q4 2020.

But when economic activities reopened last year, analysis of the full-year 2021 GDP report by the NBS shows that the growth performance of job-creating sectors like manufacturing, trade, construction and transportation improved on a year-on-year basis.

Trade grew by 8.62 percent in 2021, compared to a contraction of 8.49 percent in 2020; manufacturing grew by 3.35 percent, compared to a contraction of 2.75 percent; and construction recorded a positive growth of 3.09 percent as against a negative growth of 7.68 percent.

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Transportation grew by 16.25 percent, compared to a contraction of 22.26 percent.

The NBS household consumption and expenditure data show that the growth rate for compensation of employees stood at 13.7 percent in 2021, compared to 0.9 percent in the previous year.

Ikemesit Effiong, head of research at SBM Intelligence, said many of the sectors are growing but from a systematic point of view, they are actually recovering jobs that have largely been lost during the pandemic.

Last month, MAN said in a report that a total of 8,508 jobs were created in the manufacturing sector in the second half of 2021 as against 3,451 jobs recorded in the corresponding half of 2020 and 7,602 jobs created in the preceding half.

“The trend indicates that manufacturing jobs are also rebounding following the gradual return of economic activities in the sector after a year’s onslaught brought by the pandemic,” the manufacturers said.

A World Bank report, titled ‘COVID-19 in Nigeria: Frontline Data and Pathways for Policy’, said new jobs were created in the small-scale retail and trade sectors following the pandemic. In February 2021, around 26 percent of the working-age population (15–64 years of age) were engaged in retail and trade activities, an increase from 17 percent in January-February 2019.

Higher unemployment in Nigeria is making many jobless Nigerians seek opportunities to travel abroad, fuelling a massive brain drain that is hurting Africa’s largest economy.

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360Hausa is a current Best Hausa Entertainment blog in Africa that specialized in providing you high quality content. 360Hausa was found and manage by Abubakar Yusuf Radda (B2 [D Promoter] Slayer). A Blogger, Ghost Writer & Content creator. Follow us on Social Media @360Hausa

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Business & Markets

MFS Africa acquires US-based global tech company

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MFS Africa acquires US-based global tech company

MFS Africa acquires US-based global tech company

MFS Africa acquires US-based global tech company.

In a rare acquisition of a US tech company by an African tech company, MFS Africa, Africa’s largest digital payments network, on Tuesday announced that it has reached an agreement to buy Global Technology Partners (GTP).

Based in Tulsa, Oklahoma, GTP is the number one processor for prepaid cards in Africa, with over 80 banks – including UBA, Ecobank, BIA, Stanbic, Coris, NSIA and Zenith Bank – using its platform. GTP’s client base covers 34 countries and is fully connected to the Visa, Mastercard, GIM, GIMAC and Verve networks for which it provides the processing.

This acquisition enables MFS Africa to further deepen its offering to Africa’s gig economy, the business travel market and the millions who eagerly want to participate in the global digital commerce through card credentials linked to mobile money wallets – rather than bank accounts – for seamless and secure online purchases. It also expands MFS Africa’s bank and fintech base and provides tokenisation for the mobile money world in connection with the traditional card scheme ecosystems such as Visa and Mastercard.

Founder and CEO of MFS Africa, Dare Okoudjou, said: “This is a momentous milestone for us and Africa’s tech ecosystem – on many levels. It’s something of a first for an African tech company to acquire a US tech company of GTP’s size and stature, and we’re delighted to be welcoming the GTP team to the MFS Africa family. Their expertise enables us to extend our value proposition of last-mile connectivity to African banks and to accelerate our offering of card connectivity to mobile money users and other fintech companies operating across the continent. The combined operations have immense and exciting growth potential, and with our extended portfolio, we are now truly an omnichannel payments company.”

Robert Merrick, founder and chairman of Global Technology Partners, commented: “GTP’s established position as Africa’s number one prepaid card processor has been built on its unique, flexible platform that actively helps prepaid cards to succeed. We have become the leader of prepaid cards in Africa because of our people, who have genuine in-depth knowledge not only of the prepaid card business but also of the realities that African card users face. We connect the right solution to the right markets with the right products. MFS Africa is an ideal home for GTP, and we are focused on adding new features and functionalities to our platform, signing up new clients, expanding into new countries, driving growth and making a significant contribution to growing MFS Africa’s business and its network of networks.”

Following GTP’s acquisition, MFS Africa plans to further invest in GTP’s current card programmes with banks and bring to these all the innovation and possibilities offered by the MFS Africa HUB – including seamless interoperability with Mobile Money.

The company will also leverage GTP’s stack to fast-track card programmes for MNOs and FinTechs across Africa. Lastly, MFS Africa intends to leverage GTP’s presence in the USA to expand its commercial activities in North America.

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