Unemployment in Nigeria and South Africa to surpass 35%

Unemployment rates in several major African economies are expected to spike in the coming years, mainly due to limited investment by the private sector and slow economic growth. This is according to a new report by KPMG.

In its report, the researchers from the global accounting and consulting firm highlighted Nigeria and South Africa as among the most worrying countries in Africa when it comes to labour market developments. The two powerhouse economies risk seeing their unemployment rates surpass the 35% mark.

In Nigeria, unemployment is predicted to rise to a staggering 40% by the end of this year, with a further increase expected to 44% for 2024. With 213 million inhabitants, of which 75 million people are part of the labour force, the impact on the nation could be devastating.

“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 4-5 million new entrants into the Nigerian job market every year,” said Oyeyemi Kale, Partner and Chief Economist at KPMG in Nigeria.

Nigeria’s GDP is expected to be impacted negatively in 2023 due to the global economic slowdown, which could affect trade and financial flows. The aftermath could have adverse effects on non-oil sectors such as manufacturing, trade, transportation, and services.

In South Africa, the picture is not very different, with unemployment expected to reach an all-time low of 34%. South Africa has a population of around 60 million, of which nearly 25 million are formally part of the labour force.

KPMG’s report said that the nation is currently experiencing a perfect storm of challenges, facing issues such as severe water shortages, high inflation, low consumer spending, sluggish economic growth, and a dip in production.

“The insufficient and inconsistent supply of electricity from South Africa’s monopolistic state-owned energy supplier, Eskom, is also severely dampening potential economic growth,” said Frank Blackmore, Lead Economist at KPMG in South Africa.

Although the country is slowly returning to pre-pandemic levels of economic growth, the Russia-Ukraine war is mounting additional challenges that hinder growth prospects.