According to a recent survey, the percentage of self-employed Nigerians reportedly experienced a decline from 88.0 to 87.3 percent in the third quarter (Q3) of 2023.
As businesses continue to shut down, this has given rise to wage employment, as Nigerians are dumping their businesses to look for white-collar and blue-collar jobs to survive the harsh reality on the ground. The percentage of wage employment is reported to have increased from 12.0 percent to 12.7 percent.
Part of the report reads,
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“Informal employment in Nigeria and other developing countries seems to be very high when compared to the developed countries. The share of employed persons in informal employment was 92.3 percent in Q3, a reduction of 0.4 percent when compared to 92.7 percent in the previous quarter”.
The report disclosed that the unemployment rate rose for the second straight time in Q3 to 5.0 percent from 4.2 percent in Q2. Experts say that the decline in self-employment in Nigeria, which has led to the shutdown of businesses, poses a serious threat to the country’s entrepreneurship growth and development.
Speaking on this, the national president of the Association of Small Business Owners of Nigeria, Femi Egbesola said,
“The reduction in self-employment is an indication that more businesses are going down, particularly the micro and nano ones which are run as self-employment as a result of harsh economic realities. Inflation is on the high side and their working capital has been eroded.”
He added that it is becoming increasingly difficult to do business in the country and that the ease of business has dropped drastically.
Nigeria’s struggling economy has reportedly slowed the growth of major job-creating sectors of the economy such as agriculture, manufacturing, trade, construction, and transportation. According to the NBS GDP report, the agricultural sector slowed to 1.88 percent last year from 2.13 percent in 2022.
The manufacturing sector grew by 1.40 percent, down from 2.45 percent; while trade’s growth slowed to 1.66 percent from 5.13 percent. The growth of the construction sector also slowed to 3.57 percent from 4.54 percent, and transportation and storage contracted to 30.17 percent as against 15.20 percent.
As Nigeria continues to battle with an economic downturn, it has continued to pose a serious challenge to business owners especially small business owners who have been grappling with a combination of issues such as, Epileptic power supply, Rising borrowing costs, rising inflation, restrictive economic policies, forex crisis, amongst others.
The rise of uncertainty in Nigeria’s macroeconomic environment is on course to further dampen business activities, with some firms seen closing shop late last year and early this year.
Notably, unstable macroeconomic indicators have affected the medium and long-term plans of many businesses, a situation experts said could drive down profitability, lead to more job losses, and low tax revenue, threaten the survival rate of many businesses, or trigger more exits of multinationals.
Operators in the Micro, Small, and Medium Enterprises (MSMEs) are fuming over the harsh economic scenario in the country that is leading to the death of many Small and Medium Enterprises(SMEs) in recent times.
The business environment in Nigeria is no longer promising and futuristic as more businesses have plunged into debt due to the overhead cost of running businesses. Lots of Entrepreneurs are currently retooling their business models, while others are closing shops and revamping operating space, which has also led to the downsizing of their workforce.