High Rates of Self-Employment in Sub-Saharan Africa Limit Wage Jobs and Productivity, World Bank Report Finds

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A recent World Bank report highlights that Sub-Saharan Africa (SSA), including Nigeria, has the highest rates of self-employment and unpaid family employment globally. This trend contributes to depressed worker productivity and limits earnings for skills. The report emphasizes the pressing need for job creation in the region, as only one in six workers in SSA holds a wage job, compared to one in two in high-income countries. The prevalence of involuntary self-employment and informality in the workforce reflects the lack of job quantity and quality in SSA.

Key Points:

  • Sub-Saharan Africa, including Nigeria, has the highest rates of self-employment and unpaid family employment globally, according to the World Bank’s Africa’s Pulse report.
  • Only one in six workers in SSA holds a wage job, which contrasts sharply with high-income countries where one in two workers has a wage job.
  • The prevalence of self-employment and unpaid family employment leads to poor job quality, characterized by unstable employment, underutilized skills, inadequate equipment, and inhumane working conditions.
  • Nigeria’s labor data portrays an economy with an oversized informal sector, where the majority of employed individuals are self-employed, and a smaller proportion holds wage jobs.
  • Lack of capital hinders structural transformation for the creation of higher-quality jobs, with labor-intensive manufacturing sectors lacking in Africa.

Analysis: The World Bank’s report sheds light on the challenges posed by high rates of self-employment in Sub-Saharan Africa, particularly in Nigeria. This pattern indicates a need for policies that promote formal wage employment, improve job quality, and facilitate access to capital for entrepreneurs. Addressing these issues is crucial for fostering economic growth, reducing poverty, and unlocking the potential demographic dividend in the region. Policymakers, economists, and stakeholders interested in SSA’s economic development should consider the implications highlighted in this report.

BD

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