ANALYZING THE RELATIONSHIP BETWEEN ECONOMIC MELTDOWN AND YOUTH UNEMPLOYMENT UNDER TINUBU ADMINISTRATION

CHAPTER ONE

INTRODUCTION

Background of the Study

According to Uzochi (2023), the Nigerian economy has experienced several significant downturns in the 21st century. Economic meltdown, sometimes known as an economic crisis, can be described as a stae of economic slowdown where demand decreases, real output declines, and unemployment increases.  The latter had a particularly severe impact, leading to a recession in 2016, the first in over two decades (World Bank, 2017). The COVID-19 pandemic further exacerbated economic challenges, as global demand for oil plummeted, leading to reduced government revenues and increased economic strain on businesses and households (Ozili, 2020).

Consequently, the economic downturns have had profound socio-economic impacts. Unemployment and poverty rates have surged, with the National Bureau of Statistics reporting that over 40% of the population lives below the poverty line (NBS, 2019). Additionally, inflation has eroded purchasing power, making it increasingly difficult for average Nigerians to afford basic necessities. These challenges have contributed to widespread social discontent and instability, as evidenced by the increasing frequency of protests and civil unrest (International Crisis Group, 2021).  Economic stagnation in Nigeria has led to reduced Gross Domestic Product (GDP) growth rates. During periods of stagnation, the economy's overall productivity declines, and growth in key sectors such as manufacturing, agriculture, and services is hampered (World Bank, 2017). This reduction in GDP growth limits the country's ability to generate wealth and improve living standards.

Critically, one of the most significant effects of economic stagnation is the increase in unemployment rates. With slowed economic activities, businesses are less likely to hire new employees or may even lay off existing staff to cut costs. High unemployment rates contribute to increased poverty levels and social instability (National Bureau of Statistics, 2019). Economic stagnation often leads to a decline in foreign direct investment (FDI). Investors are typically wary of putting money into economies that exhibit slow growth and high levels of uncertainty. This lack of investment further exacerbates the economic stagnation, creating a vicious cycle of low growth and limited capital inflow (Egbetokun, Adeniyi, & Siyanbola, 2010). 

President Bola Ahmed Tinubu assumed office on May 29, 2023, after being victorious in the Presidential election held in February 2023.  Since the change in administration in May 2023, the country has been actively implementing significant changes to restore stable and favourable macroeconomic circumstances for growth. . Key initiatives include efforts to improve infrastructure, diversify the economy, and attract foreign investment (Presidency of Nigeria, 2023). Additionally, the administration has emphasized the importance of fighting corruption and enhancing governance to create a more conducive environment for economic development. Max and Uzo (2023) argued that the recent reforms provide a solid foundation for a new agreement that will drive Nigeria's development. Enhancing the underlying economic conditions will enable the implementation of structural changes and the revival of economic expansion. While it is too early to fully assess the impact of these measures, there is cautious optimism that strategic policy implementation may help steer Nigeria towards a more stable and prosperous economic future.

1.2 Statement of the Problem

Unemployment poses a significant risk to social stability in numerous nations, including Nigeria. Compared to other nations, the unemployment issue in Nigeria is more severe (ILO,2024). unemployment poses a significant obstacle to the economic progress of Nigeria. Eeconomic meltdowns arise from a range of sources, including financial crises, recessions, or exogenous shocks such as pandemics or geopolitical catastrophes (Kemi & Dayo, 2024). These occurrences disturb the mechanisms for creating jobs, decrease business investments, and result in layoffs, hence worsening unemployment rates among young people who usually depend more on starting roles and have less established professions. The study conducted by Bell and Blanchflower (2020) highlights that youth unemployment increases significantly during economic downturns because companies tend to priorities experienced or skilled workers over younger, less experienced individuals.

Additionally, the consequences of economic downturns on youth unemployment go beyond just the temporary loss of jobs. Studies investigateted the consequences of previous financial crises, such as the 2008 global financial crisis (GFC), have shown that they can impede future employment opportunities and the ability to make money in the long run. Similarly, a rsearch conducted by Algan et al. (2010) and Oreopoulos et al. (2022) demonstrates that youths who enter the workforce during times of economic instability experience long-lasting detrimental impacts on their earnings and job security. . Kayode et al. (2014) stated that unemployment is a significant obstacle to the economic development of Nigeria In a study conducted by Kareem (2015), the correlation between employment and economic growth in Nigeria was examined. The findings revealed that foreign direct investment, inflation, and interest rate exhibited a positive association with the employment rate in the economy.

To address the economic crisis in Nigeria, the Tinubu led administration has implemented stabilization policies, including import restrictions and export promotion policies. Despite the implementation of stabilization policies aimed at boosting economic activities, it seems that these policies have not been effective in solving the economic problem. Hence, it is in the light of these that the study seeks to analyse the relationship between economic meltdown and youth unemployment under Tinubu administration.

 1.3  Objectives of the Study

The main purpose of this study is to analyse the relationship between economic meltdown and youth unemployment under Tinubu administration. Specifically, the study will;

Determine the level of unemployment rate among youths in Nigeria.

Investigate the factors influencing economic meltdown in Nigeria.

Assess the effectiveness of government policies and programs aimed at reducing youth unemployment in Nigeria.

1.4  Research Questions

The following questions have been prepared for the study:

What is the level of unemployment rate among youths in Nigeria?

What are the factors influencing economic meltdown in Nigeria?

How effective are government policies and programs aimed at reducing youth unemployment in Nigeria?

1.5 Research Hypotheses

H0: There are no significant relationship between economic meltdown and youth unemployment in Nigeria.

Ha: There are significant relationship between economic meltdown and youth unemployment in Nigeria.

1.6 Significance of the Study

The study findings will offer empirically-supported recommendations for developing efficient policy responses. Policymakers will get a more profound comprehension of the precise economic variables that are worsening youth unemployment and will customise policies to alleviate these impacts. Furthermore, the findings will provide valuable insights for economic planners and consultants, enhancing their ability to engage in strategic economic forecasting and planning. The findings will also assist financial institutions in adapting lending procedures and investment plans to bolster sectors that are resistant to economic shocks, therefore fostering stability and growth even during volatile economic periods. Furthermore, this research will be utilised by organisations and groups who focus on the youth and push for policies that give priority to youth employment and economic resilience. This will guarantee that youths continue to play a crucial role in Nigeria's economic development agenda.

Nevertheless, subsequent researchers will use it as a literature review. This means that other students who may decide to conduct studies in this area will have the opportunity to use this study as available literature that can be subjected to critical review. Invariably, the result of the study contributes immensely to the body of academic knowledge with regard to the relationship between economic meltdown and youth unemployment under Tinubu administration.

1.7 Scope of the study   

The scope of this study is boarded on the relationship between economic meltdown and youth unemployment under Tinubu administration. Empirically, the study will determine the level of unemployment rate among youths, whether there is relationship between economic meltdown and youth unemployment, investigate the factors influencing economic meltdown and assess the effectiveness of government policies and programs aimed at reducing youth unemployment.

Geographically, the study will be delimited to youths resident in Lagos state.

1.8 Limitation of the study

In the course of carrying out this study, the researcher experienced some constraints, which included time constraints, financial constraints, language barriers, and the attitude of the respondents. In addition, there was the element of researcher bias. Here, the researcher possessed some biases that may have been reflected in the way the data was collected, the type of people interviewed or sampled, and how the data gathered was interpreted thereafter. The potential for all this to influence the findings and conclusions could not be downplayed. More so, the findings of this study are limited to the sample population in the study area, hence they may not be suitable for use in comparison to other schools, local governments, states, and other countries in the world.

 1.9 Definition of Terms

Economic meltdown: a severe and protracted economic recession marked by widespread economic hardship, including negative GDP growth, high inflation, substantial job losses in multiple industries, decreased investment, rising poverty rates, and overall economic instability impacting the entire population of a country or region.

Youth: individuals typically aged between 25 and 35 years who are actively seeking employment but are unable to secure jobs.

Inflation: the rate at which the general level of prices for goods and services rises, eroding purchasing power.

Unemployment:  state of being out of work and actively seeking employment.

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