CardinalStone Report Reveals Employment Disparity
A recent report by CardinalStone, a Nigerian investment banking firm, has revealed that the country's six fastest-growing economic sectors collectively employ only 2.7% of the total workforce. This stark statistic underscores a significant disconnect between sectoral growth and job creation in Africa's largest economy.
Sectors Identified as Fastest-Growing
According to CardinalStone's analysis, the six sectors with the highest growth rates include information and communication, financial and insurance activities, arts and entertainment, water supply and waste management, education, and human health and social work. Despite their impressive expansion, these sectors have not translated into widespread employment opportunities.
CardinalStone noted that the information and communication sector, which has been a standout performer with double-digit growth, accounts for only 0.5% of total employment. Similarly, financial and insurance activities, another high-growth area, employs just 0.8% of workers.
Implications for Nigeria's Economy
The report highlights a structural challenge: Nigeria's economic growth is being driven by capital-intensive and skill-intensive sectors that create relatively few jobs. In contrast, sectors that employ the majority of Nigerians, such as agriculture and trade, have much lower growth rates. Agriculture, which employs about 35% of the workforce, grew at a modest pace, while wholesale and retail trade, employing around 16%, also underperformed.
CardinalStone emphasized that this trend has serious implications for poverty reduction and inclusive growth. Without a shift toward labor-intensive sectors, the benefits of economic expansion may continue to bypass the majority of Nigerians.
Data Sources and Methodology
The findings are based on data from the National Bureau of Statistics (NBS) and other official sources. CardinalStone used GDP growth figures and employment data from the NBS's Labor Force Statistics to arrive at the 2.7% figure. The report covers the period from 2019 to 2023, during which Nigeria's GDP grew at an average rate of 2.3% annually.
CardinalStone's analysis also points out that the six fastest-growing sectors contributed about 28% to GDP growth over the period, yet their employment share remained minimal. This suggests that productivity gains in these sectors are not labor-intensive.
Policy Recommendations
To address this imbalance, CardinalStone recommends policies that promote growth in labor-intensive sectors such as manufacturing, agriculture, and services. The report calls for improved infrastructure, access to finance, and a more favorable business environment to encourage investment in job-creating industries.
Additionally, CardinalStone advises that the government should focus on skills development to ensure that Nigerians can participate in the growing sectors. Without targeted interventions, the gap between growth and employment may widen further.
Broader Economic Context
Nigeria's unemployment rate stood at 33.3% in the fourth quarter of 2020, according to NBS data, though more recent figures have shown some improvement. The country's population growth, at over 2.6% per year, adds to the urgency of creating more jobs. CardinalStone's report serves as a reminder that GDP growth alone is insufficient to address Nigeria's employment challenges.
The findings align with broader concerns about the quality of economic growth in Nigeria. Many economists argue that the country's growth has been driven by sectors like oil and gas, telecommunications, and financial services, which have limited backward linkages to the rest of the economy.
