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Nigeria has highest rate of self-employment

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By Mercy Kelani

World Bank says Sub-Saharan Africa has a urgent need for job creation.

According to the World Bank, Nigeria and other countries in the Sub-Saharan Africa (SSA) region have been recorded to have the highest self-employment and unpaid family employment rates in the world. The multilateral lender, in its most recent Africa’s Pulse report, stated that this ranking is limiting the earnings of workers for their skills and causing depressed worker productivity. The region has a urgent need for the creation of jobs as only one in six workers can boast of a wage job.

The report stated that the lack of quantity results in poor quality as a result of unstable employment, lack of appropriate equipment, inefficient use of skills, or inhumane working conditions. This is mostly apparent in the prevalence of informality and high rates of involuntary self-employment. It was reported in August, 2023, that the labour data of Nigeria defines the country as a “hustle economy” , because the informal sector recorded a massive share of employment.

Absence of development of labour-intensive manufacturing sectors.

Data from the National Bureau of Statistics (NBS) has shown that many Nigerians are self-employed, while a lesser percentage of the population have wage jobs. In the fourth quarter of 2022 (Q4) and the first quarter of 2023 (Q1), 73.1 percent and 75.4 percent of employed Nigerian workers, respectively, worked in their self-owned establishments or farming activity for their primary employments. It also stated that there was a reduction in the percentage of employed Nigerians engaged as employees in their major jobs.

NBS report showed that the reduction was from 13.4 percent to 11.8 percent. The World Bank report also asserted that the structural transformation needed for good quality jobs is hindered by lack of capital. It added that in Africa, there is an absence of development of labour-intensive manufacturing sectors as the enhancement of agricultural productivity leads to service sector growth in urban areas. This results in lack of investment in labour-complementing capital and poor labour productivity.

Nigerians seek opportunities to leave the country for abroad.

Also, Nigeria, the biggest economy in Africa, has, over the past seven years, got caught up in two recessions due to the collapse of oil prices, inability of the government to carry out an economy reform, and the effects of the COVID-19 pandemic. The unstable economy of the country has slowed down the development of major employment sectors of the economy like manufacturing, agriculture and trade. The high inflationary pressures of the country have also affected the purchasing power of consumers, impoverishing millions of citizens.

In 2022, the NBS said that 133 million Nigerians were living in multidimensional poverty. The economic challenges and uncertainties in the country have caused many unemployed Nigerians to seek opportunities to leave the country for abroad, leading to a huge brain drain that affects the labour quality of Nigeria. The World Bank, therefore, urged African policy makers to craft an inclusive growth strategy for provision of productive and steady jobs for the over 10 million youth that join the workforce every year.

Creation of job opportunities for the youth will foster inclusive growth.

Furthermore, the World Bank stated that, according to current growth patterns, there is a generation of only three million formal jobs each year, which leaves many young people without jobs. Creation of job opportunities for the youth will foster inclusive growth and convert the demographic transition of Africa into a demographic dividend. The World Bank’s report recommended that African countries should have an ecosystem for the facilitation of firm entry, growth, and stability, including skill development that aligns with business demands.

Related Link

World Bank: Website

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