youth unemployment in nigeria

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UNIVERSITY OF BOTSWANA FACULTY OF SOCIAL SCIENCES DEPARTMENT OF POLITICAL AND ADMINISTRATIVE STUDIES MPA-604 ECONOMICS FOR DEVELOPMENT MANAGEMENT STUDENT NAME: SOLOMON SAMUEL ADETOKUNBO STUDENT NUMBER: 201502535 EMAIL: [email protected] LECTURE: PROFFESOR E. BOTHALE 1

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Page 1: Youth Unemployment in Nigeria

UNIVERSITY OF BOTSWANA

FACULTY OF SOCIAL SCIENCESDEPARTMENT OF POLITICAL AND ADMINISTRATIVE STUDIES

MPA-604 ECONOMICS FOR DEVELOPMENT MANAGEMENT

STUDENT NAME: SOLOMON SAMUEL ADETOKUNBO

STUDENT NUMBER: 201502535

EMAIL: [email protected]

LECTURE: PROFFESOR E. BOTHALE

TERM-PAPER TITLE

UNEMPLOYEMENT: A STUDY OF NIGERIA

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YOUTH UNEMPLOYMENT: A STUDY OF NIGERIA

INTRODUCTION

Unemployment continues to be a global issue even as the world population continues to increase.

Some countries have effectively put in place policies that mitigate this growing issue while

others have failed to plan and continue to suffer the consequences of their actions and inactions

on a daily basis.

According to International Labour Organization (ILO) report, (World Employment and Social

Outlook Trends, 2015), there are 201 million people currently unemployed globally and by the

year 2019 more than 212 million people of the worlds population will be out of work.;

fortunately Countries like Singapore, Qatar, Thailand etc. were able to make long-term policies

that have helped stabilize their unemployment rate.

Reports from the 1952 census held in Nigeria indicate that the Country witnessed stable

employment during that period, four decades after reverse was the case. This threw the Country

in disarray and led to build up of unlawful practices in Nigeria. (Ojo, 1997, p.14).

According to the Central Bank of Nigeria (1992) in 1990 unemployment rate in Nigeria stood at

3.2%, by 1995 it improved and reduced to at 1.8%. By 2003 it rose to 2.3%, ever since then it

has kept on increasing with no practical solutions from the government to help in curbing the

factors responsible for the increase. (Uniamikogbo, 1997, p.42).

This term paper therefore, seeks to explore the issue of unemployment in Nigeria, causes and

implication on the economy; Attempts was also made at recommending solutions to help tackle

the scourge of unemployment in Nigeria to the barest minimum

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CONCEPT OF UNEMPLOYMENT

Unemployment in general refers to the condition of people who are without jobs but fall within

the workable age. The ILO defines the “unemployed,” as numbers of the economically active

population who are without work but available for and seeking work, including people who have

lost their jobs and those who have voluntarily left work. (National Bureau of Statistics, 2010).

According to (Adebayo, 1999; Bakare 2011), unemployment exists when the members of a

Country’s labor force wish to work but there are no jobs anywhere. It is the governments

responsibility to strive and ensure it provides good jobs and permeate favorable enabling

environment that will encourage young people to be employers of labour (entrepreneurs) so they

can create jobs rather than waiting for white collar jobs.

For the purpose of this term paper, unemployment will be described as when group of men and

women who fall within the working class age grade have the basic skills and are willing to work

but cannot find any job most especially the ones they desire for; or jobs that are in line with their

area of expertise and skills.

When the supply of labour is more than the demand for labour, it ultimately leads to joblessness

and creates unemployment (Onah & Bakare 2011). Due to the lack of sufficient employment

opportunities readily available in the formal sector, young people are left with no better option

than to engage in casual work, thus leading to underemployment

LITERATURE REVIEW

CATEGORIES OF UNEMPLOYMENT

Various researchers have categorized unemployment into different forms; often times the forms

depend on the socio-economic climate of the research in focus.

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Congress of the United States (2012) categorized unemployment into two forms: those that have

lost their jobs as a result of workers being laid off and those newly entering the labour force after

completing school with no job.

In the same vein Oyebade (2003, p.11), grouped unemployment into two categories, the older

unemployed who lost their jobs through redundancy or bankruptcy and the younger unemployed,

most of who have never been unemployed.

To term “underemployed”, simply refers to all the people who are not fully involved and in any

productive activity.

CAUSES OF UNEMPLOYMENT

Diejomah & Orimalade (1 s971, p.51) opined that reduction in the demand for labour, which has

resulted in the increase of unemployed labour force, has led to the high rate of unemployment

problems in Nigeria and will continue if measures are not put in place to correct this. The duo are

also of the opinion that another factor responsible for the increase in the unemployed labor force

is the growing increase of the labour force in urban areas which is caused by the push-pull factor

that arises from the rural-urban migration.

Edwards (1979) elucidates more on the rural-urban movement by using the push - pull factors to

explain the causes of unemployment. According to him, the push factor arises as a result of the

pressure coming from the man-land ratio that exists in the rural areas. Todaro (1987, p.12)

blames the rural-urban migration that is generated by the push-pull factor to the distastefulness

and repulsiveness of life in the rural areas caused by in-accessibility to infrastructure and basic

amenities

Todaro (1987, p.36) attributes rural-urban migration to the relative unattractiveness of rural life

due to lack of basic amenities. This push-pull factor brings about a constantly widening rural-

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urban income gap in favour of urban dwellers and a presumed higher probability of securing

wage employment in the cities.

Unemployment in Nigeria is soaring high due to government’s decision to administer the

economy with policies that are extraneous and not fit to meet the yearning of the public. Some of

these policies are usually forced or shoved down the throat of countries who are beneficiaries if

foreign donors as a result of the Country’s dependence on them for socio-economic resources.

E.g. International Monetary Fund (IMF) and the World Bank. The failed 1986 Structural

Adjustment programme imposed on Nigeria by the IMF is an example of such case.

Ojegbile (1986) is of the opinion that the alarming rise of unemployment in Nigeria was as a

result of the mono-product economy the Country decided to adopt. After the discovery of oil in

the 70’s in Nigeria, the government clamped down Agriculture and relied more on oil as a source

of generating revenue for the Country; unfortunately this approach has done more harm than

good in terms of unemployment.

THEORETICAL LITERATURE

Keynes (1936) in his book “The General Theory of Employment, Interest and Money” which

brought about the "Keynesian Revolution” argued the classical analysis of employment and

insisted on nominal wage flexibility. He pointed out that insufficient demand in the commodity

market ultimately leads to involuntary unemployment; however Keynes concurs that once an

economy moves into a state of high unemployment, the price method will not adjust the

economy back to a high level of employment rather, the government’s qualitative policy will

have to increase the demand for output by raising public expenditure as soon as demand is

increased.

(Okun 1963, p.11) contributed by stating that there is a reverse connection that exists between

unemployment and output of a Country. He proposed a theory that asserts that one percent

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decrease in employment is responsible for a three percent increase in input, which can affect a

Country’s foreign-exchange reserve.

According to the Nigeria National Bureau of Statistics Unemployment / under‐employment

watch Q2 (2015) report, unemployment and underemployment were highest for persons in the

work force between the ages of 15‐24 and 25‐34 which represents the youth population work

force. The rate of unemployment within the review period was highest for those within the ages

of 15‐24 (14.9% in Q1 2015, up from 13.7% in Q1 2015), while the underemployment rate for

those within the age’s 15‐24 rose to 33.8% from 30.6% in Q1 2015. For those in the labour force

within the ages of 25‐34 however, unemployment rose to 8.9% in Q2 2015 from 8.2% in Q1

2015 and 6.9% in Q4 2014, while underemployment stood at 19.5% from 17.7% in Q1 2015 and

19.0% in Q4 2014. Accordingly, 48.7% of Nigerians in the labour force (not entire population)

aged 15‐24 were either unemployed or underemployed in Q2 2015 compared to 44.3% in Q1

2015, while another 28.4% aged 25‐34 were either unemployed or underemployed in Q2 2015

compared to 25.9% in Q1 2015.

The issue of unemployment has eaten deep into the fabric of the Nation like a cankerworm due

to the negligence of Nigerian leaders; the society continues to pay for it dearly on a daily basis.

The high level of youth unemployment in Nigeria has significantly contributed to the dramatic

rise in social unrest and crime such as Kidnapping, “419 yahoo-yahoo scam” Niger Delta

militancy, vandalism of the oil pipelines nationwide, and the Boko Haram (which means

Western Education is forbidden”) crisis amongst other.

One implication of the unemployment scourge is that it leaves most of these youths who will be

parents in their not too distant future with little or no adequate skills to compete globally in a

rapid emerging and competitive world and without the skill and experience it will be difficult for

them to find a balance and propel on the wheels of development (Douglason, 2009).

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The cost implication of crime varies among the various segments of the growing youth

population and affects everyone in the society directly or indirectly. As the Nigeria economy

continues to witness growth and development, it is expected that crime rate would gradually

reduce.

The various cost of crime to victims and society include loss of lives, income, property and loss

in community productivity.

According to Nigeria Federal Bureau of statistics (2012), data on age group of people living in

Nigeria imprisoned between 2004 – 2011; youths between 16 and 20 years, 31,700 of them were

jailed in 2004, others include, 40,170 in 2005, 19,122 in 2006, 16,236 in 2007, 25,337 in 2008,

23,743 in 2009, 21,911 in 2010, and 10,103 in 2011. Age between 21 and 25 years, 39,045

youths were jailed in 2004, 34,600 in 2005, 57,736 in 2007, 28, 069 in 2008, 27,468 in 2009,

26,647 in 2010 and 14,835 in 2011 Also, between ages 25 and 50 years, 63,200 persons were

jailed in 2004, 65,140 in 2005, 75,491 in 2006, 80,134 in 2007, 73,071 in 2008, 98,263 in 2009,

118, 140 in 2010 and 102,330 in 2011.

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National Bureau of Statistics 2013

One of the major reasons behind the high number of imprisonment was unemployment

(Douglason 2009). if the culprits were to be gainfully employed with good benefits incentives

they might not have attempted to carry out such unlawful acts that landed them in Prison

REASONS FOR UNEMPLOYMENT IN NIGERIA

The reasons for the increased unemployment rate in Nigeria are quite enormous. Below are some

of the major reasons considered to be what contributed to the influx.

RURAL-URBAN MIGRATION

Rural urban migration also referred to, as urbanization is easier explained with the push-pull

technique. The push –pull factor involves the pressure resulting from a man or woman having no

choice but to leave behind his current residence, city or Country as a result of the unemployment

or underemployment in that rural area arising from cycle of little or no infrastructure amenities

and development facilities, which generally makes the life in the rural area very unattractive.

Bairoch (1976, p.102) opined that excessive supply of labour cannot be separated from the issue

of the population growth rate due to the fact that size and growth rate of labour force is said to

depend primarily on the size and growth rate of the population. He further added that both have

been growing too rapidly in developing countries to the extent that employment expansion could

not keep pace and thus resulted in the growing unemployment.

Youths move to urban areas in search of greener pastures with the hope of securing lucrative jobs

in the cities and advanced countries of the world. This has brought about brain drain, leaving the

Country/rural areas intellectually barren.

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The major cause of rural-urban migration is concentration of social amenities in limited areas

such as the urban centers which result to lack of social and economic opportunities in the interior

and rural areas leading to overcrowding and high crime rate in the urban area.

RAPID POPULATION GROWTH

Nigeria’s population was put at 140,431,790 based on the 2006 population and housing census

conducted by the Nigeria National Population Commission; by October 2011 the Commission

reported that Nigeria’s population had reached 167 million. The prediction for the future shows

that the population could increase to over 221 million by 2020, given the 3.2 percent annual

growth rate (National Population Commission and ICF Macro, 2009).

According to the World Bank (2013), Nigeria is the most populous Black Nation in the World. It

is asserted by researchers that the increasingly high population growth has resulted in the rapid

increase of the work force, which has led to unemployment leaving just a handful of jobs for the

millions of youth to struggle over. The implication of the increasing population growth coupled

with high level of unemployment in Nigeria is disastrous to the economy and will only bring

about a state of insecurity that is unsafe for the working class and those who fall within the other

age grade.

LOW STANDARD OF EDUCATION

The average Nigerian graduate is unemployable due to the fact that they do not possess the

quality skills required by most employers of labour or for their desired employment.

In Nigeria of today, no employer of labour is ready pay or spend unnecessarily except on human

resource that can contribute positively through their skills and hands on experience to help

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achieve the long and short term goals of the organization; since the primary goal of every

business organization is to make profit.

Often times, unemployment is attributed to the low standard of Nigeria’s education system. The

courses taught in Nigeria tertiary institution lack proper entrepreneurial contents that can help the

students become entrepreneurs instead of job seekers upon graduation.

Another factor that has contributed to this long-term crisis is the hindrance of access to

entrepreneurial training caused by limited and stringent access to capital and funds to establish

small and medium-sized enterprises after the training.

This lack of opportunities for young graduates makes them idle and constitutes a nuisance in the

society.

LACK OF ADEQUATE INFRASTRUCTURE

Nigeria is repellant to investors and investment due to lack of constant and sustainable power

supply/energy.

In spite of the several attempt made by the Federal Government to provide the necessary

infrastructure that will encourage a private driven economy, the government has failed. This

situation has forced firms and organizations in the Country to depend on generators and

alternative power supply for their daily operations, adding to the cost of production, which leads

to an increase in overall running cost of the business.

Besides the epileptic power supply and lack of infrastructure, most organizations in the Country

also bear the burden of multiple taxations being paid by these business owners to the government

at the three tiers (Federal, State and Local). (Adeloye, 2010). These combined factors have made

the cost of managing business organization in Nigeria very difficult.

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All these factors have made a very high number of companies fold up while some others have

relocated to a more enabling and economic-friendly environment. When this happens workers

are laid off and the hopes of employment are dashed.

CORRUPTION

Corruption is another big contributor to the cause of growing unemployment in Nigeria, this

unlawful practice has invaded every nook and cranny of the Country; both in the private and

public sector. The high rate of corruption in Nigeria is a product of bad leadership, which has

been spread from the top echelon to the grassroots.

Despite the vast mineral resources Nigeria has at its disposal, corruption has robbed the Country

of becoming a vibrant economy. Public funds supposed to be used for implementing projects

have been syphoned and embezzled by politicians and administrators of public enterprise and

parastatals. According to (Okafor, 2011, p.14) Political leaders, administrators and project

contractors come together and inflate contract fees. This act has robbed Nigeria’s treasury

revenue worth billions of dollars from the sale of oil in the last fifty years. The former Minister

of Petroleum, Allison Madueke still has unanswered cases with the anti-corruption agency

following the misappropriation of public funds that rocked her administration

The Nigerian Leadership sphere in the last sixteen years has failed the citizens due to the trail of

corruption that has witnessed each successive administration and this has led to the failure of

creating jobs and forming competitive public private partnership; nowadays Nigerian Politicians

no longer serve in the best interest of the public but in the best interest of their family and

friends; only a handful of them are principled while the vast majority of them go into office and

abuse entrusted power for their private gain.

A vivid example of this case is the Subsidy Re-investment and Empowerment Programme

(SURE-P), a supposedly economic intervention that reduced the amount of subsidy paid on the

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premium motor spirit (PMS), these funds were expected to be channeled into a combination of

many programmes to promote and provide quality life-changing development to the benefit of

Nigerians and alleviate poverty through provision of l jobs opportunity and safety net projects.

SURE-P has been described by many Nigerians as a drain pipe on Nigerians economy after it

failed to meet up with its objective and misappropriation of 180 billion Naira

($904,636,260,836.79) fund it received from the government in 2013 for the implementation of

project (Okwudili & Emmanuel 2014).

LACK OF POLITICAL WILL

The abandonment of vocational/technical education with much emphasis now placed on the

formal education, which gives no entrepreneurial training, has been making Nigeria miss out of

the potential contributions of young working class group to national development and economic

growth.

The incompetence of lawmakers to make logical and well informed decisions has led Nigeria to

the stage where the Country is today. (Dike 2009, p.51) argues that the state under-employment

in Nigeria could be associated to the neglect to vocational education institutions in spite of the

fact science & technology has been a part of the Country’s National Policy on Primary Education

(NPE) since 1981. Like most public policy in Nigeria, the implementation phase has always

been the major challenge which many have termed as the lack of political will by our leaders,

simply because they aren’t ready to make sacrifices and pay the political cost it may require.

SKEWED BUDGETARY ALLOCATIONS

Even though Nigeria prides herself to have the largest economy in Africa with the highest GDP,

the average Nigerian standard of living is still all time low as most are underemployed or

unemployed, leaving wealth to revolve around few political elite and associate. This has brought

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about a wide margin between the poor and the rich in the Country, which also encourages class

and segregation system.

The Federal Government of Nigeria allocation of distributable revenue is 54%, while that of the

state stands at 25% and the local government gets 19%; out of the 54% share the Federal

government gets, only 20-30% go to capital expenditure, while the remaining share goes to

recurrent and overhead cost; in comparison with a state like Lagos that allocates between 40-

45% to capital expenditure on a yearly basis (Salami, 2013).

One can therefore come to conclusion that there exists a reverse relationship between the capital

expansion and income system. A suggestion is that the Federal government should pay the price

of investing additional resources and committing more funds to infrastructure development in

order to yield increment in the income of Nigerian workers, especially the underpaid; additional

infrastructure will also bring about job creation for the millions of unemployed people in the

Country.

EFFECTS OF UNEMPLOYMENT PROBLEMS IN NIGERIA

The effect of unemployment can be broadly categorized into three, social, economic and

political. The social consequence brings about inability to provide for basic things and thus leads

to poverty. The economic consequence leads to under-resourcefulness of a nation as a result of

failure to optimize the work force and if this happens for a very long time it will result to

workers losing their skills, loss of human capital and income inequality. The political

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consequence of unemployment in Nigeria ranges from Civil unrest, political thuggery, terrorism

etc. Others are:

INEQUALITY OF INCOME: Inequality of income is one of the adverse effects of

unemployment in Nigeria. According to the Nigeria Federal Bureau of statistics (2011), in 2010,

65% of Nigeria’s wealth was owned by just about 20% of the population, which led to many

dimensions like concentration of wealth in the hands of few individual while majority so the

population suffered in abject poverty.

Inequality of income, poverty and unemployment can be said to be the cause of the increase in

violence and crime in Nigeria. Failure on the path of government to address socio-economic

issues facing Nigeria has brought about the accelerated increase in the unemployment rate.

DECLINE IN QUALITY OF LIFE: In Nigeria, unemployment has brought about the decline

in quality of life and standard of living. This has also created a vicious cycle of insecurity,

tension, conflicts, decline in access to shelter, education, health care etc. which ultimately leads

to reduction in life span.

NLC (2012) asserts that increase in the number of employment available and a rebased GDP

does not transform into social well being for the public. Unemployment has intensified the

epidemic of insecurity and other social vices in the society.

RECOMENDATIONS

Unemployment is one of the most devastating ailments troubling Nigeria. In addressing this

scourge, a holistic approach is needed to help combat and shrink the excesses of its stinkers.

The following are recommendations to deal with Nigeria’s rapid increase in unemployment.

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INFRASTRUCTURAL DEVELOPMENT: In order to savage the unemployment situation in

Nigeria, the government has to invest heavily to help promote infrastructure development in the

Country. A good example is power generation; the epileptic power infrastructure is a factor that

has contributed to the slow development of the Country. The poor state of in Nigeria has made

many organizations fold up while some others have had to relocate to neighboring countries with

good power infrastructures leaving thousands jobless.

If the government is able to invest funds in getting more megawatts to enhance power generation

more Organization would spring up leading to employment opportunities for job seeker. In

addition to the power Infrastructure, the government also have to have to develop transportation

systems in the county by creating alternative transportation systems and construct roads to help

promote agriculture in the Country.

One of the reason agriculture has failed in Nigeria is a s a result of bad road network, if this is

fixed then Nigeria agriculture sector would bounce back again and this will bring about more

jobs for the unemployed youths.

If all these are readily available it will attract both local and foreign investment in the Country

DIVERSIFICATION OF THE ECONOMY:

One of the failures of the past Government administration is the reliance on oil as its main source

of revenue at the expense of agriculture and other sectors.

Diversification of Nigeria’s economy is the only viable way to survive the current

environment of global economic trend; It is crucialfor the government not to

believe that oil provides an endless source of revenue (Suberu et al., 2015, p.107)

When Nigeria’s economy is diversified and other sectors like mining and agriculture are

allocated necessary funds to operate, it will definitely require more hands to help in the discharge

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of duties and this will help engage the unemployed youths as well as increase productivity on the

path of government which will amount to a win-win situation.

On October 1st 1960 when Nigeria gained independence, the key drivers of the economy were

mining and agriculture but by the 70’s when crude oil was discovered, mining and agriculture

were neglected and crude oil took over, making Nigeria become a mono-product economy. This

had led to an increase in the rate of unemployment in the Country.

ENTREPRENEURSHIP DEVELOPMENT & SKILL ACQUISITION:

Nigerian government have to go back to the drawing board and re-incorporate skill acquisition

and entrepreneurship development curriculum for every student in tertiary institutions so that

they can be sensitized and trained on vocational training.

The government should invest more on education that will empower the average Nigerian youth

to become self-reliance as opposed to seeking white-collar jobs after graduation. This can be

achieved through skill acquisition and entrepreneurship development.

Currently the government is promoting skills acquisition programs in the Country through the

National Youth Service Corps (NYSC) a one-year programme designed for graduates of

Polytechnics, College of Education and Universities.

The objective of the Skills Acquisition and Entrepreneurship Development (SAED) programme

is to sensitize Corps members on the need to empower themselves with skills that can make them

employers of labour rather than having to look for job after school.

ACCESS TO GRANTS AND LOANS WITH LOW INTEREST RATE

An avenue to endi unemployment in Nigeria would be to provide convenient loan systems to

budding entrepreneurs to help them expand or set up small and medium sized businesses. Often

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times, emerging entrepreneurs who have good ideas and initiative are discouraged by the bank

lending rate and this make them resort to doing nothing.

If access to credit at no more than ten percent interest rate were provided as opposed to the 25%

lending rate applicable in Nigeria, it would create a ripple effect that will lead to a virtuous

cycle of reducing unemployment at a geometric rate. In essence, the loan they receive will allow

them set-up their businesses and employ people to work with.

In addition to the loan system, the government can also increase business ideas pitching. This

will grant those who have valid business ideas seed funds to grow their business, and help solve

unemployment by employing a significant number of people in the Country.

CONCLUSION

The scourge of unemployment in Nigeria is a deterrent to the Nations dream of a progressive

economy. This could have been avoided if proper planning for the future had been put in place,

not withstanding it is not too late to right the wrongs of the past government.

Issues like rural-urban migration, corruption, low infrastructure investment, epileptic power

supply, low standard of education, rapid population growths etc. are the major deterrent to high

employment opportunity in the Country, if the government can fix this, then Nigeria will be on

the rise to greatness once again.

Unemployment has affected Nigeria and contributed heavily to the instability and uprisings in

the Country. Lack of good jobs and underemployment has resulted in inequality of income,

which has further accelerated the spread of poverty, also it resulted in political consequence like

civil unrest, political thuggery, terrorism etc.

Youth unemployment is a threat to the future development of Nigeria and requires holistic

approach in resolving the issue. Solutions on how high rate of unemployment in Nigeria were

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recommended, they include: infrastructure development, diversification of the economy,

entrepreneurship development and skills acquisition, access to grants and loans with low interest

rate etc.

Enough of the lip service, the Nigerian government should provide an enabling environment that

would promote industrial climate investment for emerging entrepreneurs and give room for a

private driven economy. Members of the public are also expected to hold the government

accountable in ensuring they fulfill their promises and make policies that will meet the yearning

needs of unemployed youths in Nigeria.

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