The curse of the Nigerian worker and its impact on her tech ecosystem (I) – A report

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Happy workers day! If I had a dime for every time I have heard this phrase today, I’d have a new minimum wage faster than the NLC (Nigeria Labour Congress) and the ministry of labour & employment can arrive at a reasonable figure for workers’ salaries.

On this TechCity Special, Shalewa Williams examines the Nigerian tech space and its direct effect on workers, from 2015 to date.

“The most important choice you can make is to maximize your greatest resource, the Nigerian people. Nigeria will thrive when every Nigerian is able to thrive” — Bill Gates

Nigerian Human Capital Event, Abuja, Nigeria

March 22, 2018

Change!

President Muhammadu Buhari waves to the crowd during his inauguration at the Eagles Square in Abuja, on May 29, 2015.  (PIUS UTOMI EKPEI/AFP/Getty Images)

The turn of the Buhari Administration seemed to usher in a new ray of hope for the Nigerian people; safe to say its workers.

Nigerians had voted in the change they wanted; keeping their own end of the bargain and the Federal Government in turn was to keep theirs – get to work by implementing policies and initiatives that would translate to the welfare of the average Nigerian!

In September 2015, the newly elected President Muhammadu Buhari directed the Central Bank of Nigeria to disburse N689.5 billion as bailout to 27 states of the federation to pay salaries. This would be the first of many bailouts to come.

A year after, in 2016, Nigeria would go into a recession and hit an all-time high inflation rate of 18.7% in 2017, the worst in 29 years. This would automatically lead to skyrocketed unemployment rates which would translate to loss of jobs.

According to the National Bureau of Statistics (NBS), unemployment rose from 14.2% in 2016 to 18.8% in the third quarter of 2017. Dollar would go from N199 in 2015 to about N300 in 2016 to an all-time high of N500 the following year before restabilizing to its current N365. Oil prices also rose from trading at $50 in April 2017 to $72 in April 2018.

This would be evident in retrenchments in the private sector, and in the Government owing salaries; citing the sudden change in the economic environment as being majorly responsible.

Efforts made by Government to ease the suffering of its citizens in the civil service can thus be summarized in one sentence: Weeding of ghost workers and granting of Federal Govt Bailouts.

This of course would be restrictive and wouldn’t necessarily affect workers in the tech ecosystem, mostly in the private sector.

In the private sector, micro small and medium enterprises (MSME), small and medium enterprises (SMEs), start-ups (which all form a critical part of the Nigerian economy and employment to her citizenry), and already established tech companies would share in the portion of this economic environment. According to reports, SMEs contribute 48% to the Nigerian GDP and would account for 80% of employment. Major!

Bill Gates would further lend credence to this in his 2018 Human Capital Development speech where he highlights the importance of the government “continuing to open up opportunities in agriculture and microenterprise sectors…creating the conditions where Nigerians can reach their goals while adding value to the economy—the win-win scenario”.

Nigeria would emerge from its recession in the 2nd quarter of 2017, growing by 0.7% year-on-year after 5 straight quarters of negative growth, and the inflation rate has continued to drop over the period and is currently at 13.34%.

The tech sector has time and again proven to be one of the drivers of innovations in the Nigerian economy; instrumental to growth and a main employer of labour of Nigerian youth irrespective of academic backgrounds. The Federal Government also has come to realise the importance of knowledge gained in this space even to the public sector and has reportedly signed a deal with South Korea to train over 22, 000 public servants in Nigeria on e-government, in a bid to enhance the capacity of public workers in delivering their duties in the public domain; providing them with short and long-term training courses.

The #VPTourOfTech vs #LazyNigerianYouth

On April 17th 2018, the Vice President of Nigeria; Professor Yemi Osinbajo accompanied by an entourage would revalidate this through his tour (#VPTourofTech) to a couple of Tech Hubs in Lagos; notably owned by Nigerian youth. Commending the works of these hubs, his purpose for visiting would be to spur innovations and boost technology drive.

Vice President, Yemi Osinbajo with Seni Sulaiman of Andela on the VP’s tour of tech companies in Lagos recently

According to him, technology is the future of Nigeria’s economy, commerce and industry. Interestingly, this would be a sharp contrast to the President’s thoughts a day after on the Nigerian youth at the Commonwealth meeting held in the UK referring to them as uneducated and waiting for handouts. A statement which caused a social media outrage and gave rise to the #LazyNigerianYouth hashtag or #HardWorkingNigerianYouth as you find preferable.

Narrowing the focus on the Federal Ministry of Science & Technology whose mission is to facilitate the development and deployment of science and technology, headed by Dr. Christopher Ogbonnaya Onu and Federal Ministry of Communication Technology to facilitate ICT as a key tool in the areas of job creation, economic growth and transparency of governance, headed by Barrister Adebayo Shittu leaves a lot to be desired.

Minister of Communications, Adebayo Shittu (Middle) showed up at the the federal executive council (FEC) meeting donning a President Muhammadu Buhari re-election campaign fez cap

The latter would seem more active and relevant in the tech space majorly due to the huge Foreign Direct Investment (FDI) of over $30 billion that Information Communication Technology (ICT) generates; the internet as an active tool to Nigerian citizenry; and probably its more recognizable and “popular” minister.

The Odds and the Reality

In a bid to rebalance the economy, the government established the Economic Growth and Recovery Plan (EGRP) 2017-2020. In the Economic Recovery & Growth Plan, the government identified 6 priority sectors – Agriculture, Manufacturing, Construction & Real Estate, Utilities, Solid Minerals, and Oil & Gas. No mention of the ICT sector. While the sector was committed, we will look at the ministries of Science & Technology and Communications Technology vis-à-vis these ‘priority sectors’ and the overall budget.

In terms of growth, the overall proposed budget grew by 15.74% from 2017 to 2018. Agriculture, Power-Works-Housing, Mines & Steel, and Petroleum Resources grew by 27.48%, 0.60%, 2.72%, and 5.80% respectively, while the ministry of Science & Technology and Communications Technology grew by 8.91% and -1.86%.

In terms of allocation in the proposed budget, P-W-H got the lion’s share of 6.85% (N590bn), with Agric coming second at 2.01% (N172bn). P.R. and M&S follow with 0.86% (N74bn) and 0.27% (N23bn). The ministry of ST and CT got 0.88% (N75bn) and 0.22% (N19bn). This would be a reduction however from 0.93% and 0.26% in 2017. Another critical sector; Education gets 5.77% which is still below all other E9 countries (Bangladesh, Brazil, China, Egypt, India, Indonesia, Mexico, Nigeria and Pakistan). As this will be a less contested metric of comparison than the disputed UNESCO 26%.

Bill Gates in his speech, explains the dynamics in a World Bank World Development Report which makes it clear that education leads to improvements in employment, productivity, and wages.

Wages.

The current minimum wage of a Nigerian public sector worker is N18,000 which came into effect in 2011 from its previous N7,500, and it has been unanimously agreed that this amount is long overdue for a review as it is no longer realistic for the survival needs of any Nigerian.

Foisted first by Members of the House of Assembly in 2017, an upward review of this to N30,000 was called for, as Lawmakers highlighted the tendency for an average worker to resort to corrupt practices in a bid to survive.

The Nigeria Labour Congress (NLC) has taken this agitation further in a proposal, to almost double of this amount at N56,000, in a bid to reflect inflation and other economic realities in the country. Although the Minister of Labour and Employment; Chris Ngige has assured workers of this review before the end of the year, The Director-General, Budget Office of the Federation, Ben Akabueze however hopeful, stated that there was no provision yet in the 2018 budget proposals to cater for the planned increase.

In April 2018, the NLC made fresh demands for a higher wage of N66,500 and is hopeful the minimum wage would be concluded before the end of the year. Today, the leader of the labour union, Ayuba Wabba was quoted as saying, “this year’s May Day, workers should gear themselves up for many more fights for better working condition and welfare and always be ready to pursue their need at all times as a union.”

In the 2nd part of this report, we will examine how public sector issues have crossed over into the private sector and how much of a blow these issues have dealt workers in tech companies across the country.

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