URBANIZATION AND UNEMPLOYMENT ON THE NIGERIAN ECONOMY

ABSTRACT

This research project examined the effect of urbanization and unemployment on the Nigerian economy from 1980 – 2015. Using Ordinary Least Square (OLS) method. Various statistical test such as R² square, F – test and T-test was used in evaluating the parameter estimates. The empirical findings of the study revealed that urbanization has a significant negative relationship with unemployment in Nigeria and inflation rate has a negative but insignificant relationship with unemployment rate in Nigeria. This can be done through intensive campaign about birth control. The study therefore recommended that in other to reduce and curb the menace of unemployment in Nigeria, rapid urbanization of the rural areas should be pursued by the government so as to open up such areas to industrial activities and through it reduce unemployment.

CHAPTER ONE

INTRODUCTION

• Background of the Study

The rate of urbanization is increasing in both developed and developing countries. However, rapid urbanization, particularly the growth of large cities and the associated problems of unemployment, poverty, inadequate health care, poor sanitation, urban slums and environmental degradation pose a formidable challenge in developing countries. Available statistics shows that, more than half of the world’s population lives in urban area at the end of 2010 from 49% (3.2billion) in 2008. The same report shows that figure is likely to rise to 60% (4.9billion) by 2030 (UN 2011). According to the UN state of the world population 2007 report, the majority of the people worldwide will be living in towns or cities, for the first time in history; this is referred to as the arrival of the “urban millennium” or the “tipping point”. In regards to the future trends, it is estimated that 93% of urban growth will occur in developing nations, with 80% of urban growth occurring in Asia and Africa.

Urbanization simply defined, is the shift from a rural to an urban society and involves an increase in the number of people in urban areas during a particular year. Urbanization is the outcome of social, economic and political development that leads to urban concentration and growth of large cities, changes in the land use and transformation from rural to metropolitan pattern of organization and governance.

Although urbanization is the driving force for modernization, economic growth and development, there is increasing concern about the effect of expanding cities, particularly on human health, livelihood and environment. The implication of rapid urbanization and demographic trends for employment, food, security, water supply, shelter and sanitation, especially the disposal of waste (solid and liquid) that the cities produce are staggering (UNCED, 1992). The question that arises is whether the current trends in urban growth is sustainable considering the accompanying urban challenge in the developing countries.

Thus, significant attention to us is the problem of unemployment as a result of urbanization in the Nigeria urban areas. Urban unemployment or unemployment in the urban Nigeria stands for the conglomeration of people with diversity background, willing and able to work in the area resulting in pressure of supply of labour over the demand of labour. Thus causing joblessness, implicit in this definition are the following for excessive manpower supply of labour over manpower demand for labour, there may have a given situation whereby job seekers irrelevant or not needed education qualification, both the private and public sectors may not have involved a calculated policy tom afford them the opportunity for self employment through planned programs. In Nigeria it is estimated that in 1900 about 95% of Africa’s inhabitant of Southern Sahara lived from the primary occupation of farming, hunting, gathering of fruits, cattle anomalism, and fishing (Aase, 2003). This means that less than 5 % were urban. In 1950 (the start of the independence period) 14.7% of Africa’s inhabitants were urban in 2000 and had risen to 37.2% in 2007 at the estimated rate of 3.76% per year (UN, 2002) the Nigerian city of Lagos in 1963 had 665000 inhabitants (Rakodi, 1991) and 8.1 million in 2000 is expected to become the world’s 11^th biggest city by 2015 with 16million inhabitants (UN, 2002).

Therefore, a survey by the UN international labour organization (ILO) indicated that as many as 3million Nigeria fall within the working age out of this, 90% or about 3million are unemployed. A further study on geographical distribution of those unemployed shows that as many as 2.7million out of the 3million live in urban area (ILO survey report African concord 1996).

Surely, it is very difficult to ascertain the current rate of unemployment in Nigeria but evident that urban unemployment are overwhelming. There is no gainsaying that there are significant correlation between urbanization and unemployment in Nigeria though urbanization is also a consequence of industrialization or economic specialization. It connotes the movement of people principally from agricultural productivity. The process involves changing relationship and interaction.

Conclusively, there exists convincing evidence that the bulk of urban unemployment in the country is among able bodied youths. Data shows that in 2009 at the recent Nigerian Economic Summit Group (NESG) policy dialogue on the Nigerian economy, Nigeria’s minister of finance quoted data from the National Bureau of Statistics (NBS) saying that “unemployment in Nigeria is running at around 19.7 percent on average and almost half of 15-24 year olds living in Urban areas are jobless” the theme of the policy dialogue growth public private partnership.

• Statement of the Problem

The Nigeria population of about 150 million with a growth rate of 3.2%. Urban unemployment is growing progressively worse due to rural to urban migrations. In the Urban areas, coupled with concentration of infrastructure and amenities living. Some adolescents do think about and job at all until they are faced with the issue of locating one in the urban center. The contributing factor to this is that youths are not formally provided with occupational information which result into inefficiency, low productivity, low or lack of job satisfaction and they all culminate into underdevelopment.

Through most of history, the human population has lived a rural lifestyle, dependent on agriculture and hunting for survival. In the 18^th century, only 3 percent of the world’s population lived in urban  area. By 1900 about 14 percent has migrated to urban areas but by 1950, 30 percent of the world’s population resides in urban centres. The number of cities with over 1 million people had grown to 83.  In 2008, the world has experienced unprecedented urban growth in recent decades. For the first time, the world’s population was evenly split between urban and rural areas. There were more than 400 cities over 1 million and 19 over 10 million. More developed countries lived in urban areas. It is expected that 70% of the world population will be urbanized by 2050.

Percentage of population residing in urban areas in the year 1985 was 31.0% and in the year 1990 it was 35.2%.

Unemployment rate according to IMF

• Research Question

The research question for this study is as follows:

1. Does urbanization and unemployment have any relationship in development of Nigeria?

• Objective of the Study

The objective of the study is:

1. To examine the relationship between urbanization and unemployment in the development of Nigeria.

• Hypothesis of the Study

For the purpose of this study, the following hypothesis will be tested.

H₀: urbanization has no significant impact on unemployment in Nigeria.

• Significance of Study

The significance of this study is as follows:

The studies provide an econometric basis upon which to examine the effect of urbanization and unemployment on Nigeria’s economy, which will be useful to Nigeria as a whole. The study add intellectual value of Nigerians. The knowledge of the effect of urbanization and unemployment were used to broaden individual’s outlook, sharpen their intellect, and inculcate in them the habit of balanced thinking.

The study also educates the government and youth who ignored agriculture in pursuit of white collar jobs in the office.

Finally, the study served as a reference material for further studies.

• Scope and Limitation of the Study

This research work focused on issue of urbanization and unemployment in Nigeria and covers a period of time between 1980-2015.

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