By Lukman Otunuga, Senior Research Analyst at FXTM,

Africa’s largest economy entered the new quarter with a strong likelihood of following the same old story, namely COVID-19 headwinds, recessionary trends and widespread local and global market uncertainty.

What are the chances of a plot twist?

In a year full of twists and turns, the Central Bank of Nigeria (CBN) surprised investors with a 100 basis point interest rate cut from 12.5 percent to 11.5 percent. The monetary policy signal is a green light for more affordable lending which could stimulate economic growth and temper recessionary pressures. However, the same green light could speed up the inflationary pressures which weigh on the economy.

The currency markets may view the CBN’s rate cut as a sign that monetary policy no longer prioritises foreign investors seeking high returns on deposits.

Until now, the CBN’s hawkish monetary policy helped to maintain and grow the banking system’s foreign currency reserves, providing the Naira with a cushion against further weakness. The current weakening global and domestic economic outlook does not support a high-interest rate environment in the short term. Faced with a protracted recession or runaway inflation, the CBN appears to have chosen the lesser of two evils. The central bank’s latest statement indicates that high interest rates have not been successful in checking inflation, which the CBN blames on structural factors like rising fuel and electricity prices.

This raises the question of why an Oil-producing country faces inflation in fuel and electricity prices when fossil fuels are locally produced and ought to be more affordable. The answer is the strange economic distortion created by COVID-19. In this case, Nigeria applied to borrow $3.4 Billion from the IMF in order to bail out the economy because of the COVID-19 pandemic. The money will have to be repaid – cue a hike in electricity tariffs to increase government revenues from utilities and bolster its repayment capacity. This would be credit-positive as the last thing Nigeria needs in such extraordinary times are doubts over its creditworthiness.

Weaker global Oil prices make Nigeria’s creditworthiness even more of an important factor because the state is hard-pressed to cover its budgetary needs in the current climate of low demand for crude Oil.

Now that the CBN has put checking inflation lower down in its priorities, does this signal further rate cuts in the near future?

The case for further pandemic-driven rate cuts appears to be strong. The COVID-19 outbreak shows no signs of abating. On the contrary, at the time of writing, the number of new cases in Nigeria is on the rise after lockdowns eased. Further monetary stimulus to the economy appears unavoidable.

Of course, it all depends on what happens with inflation. If the inflation rate keeps rising in sectors like fuel, electricity and food it may drag on consumer spending, outstripping the economic benefits of lower interest rates. Medical costs have also risen because of COVID-19, according to the August inflation statistics.

The pandemic comes at a time when Nigeria is exposed to external and domestic risks. Locally, the drive to diversify the economy stayed stuck in first gear. Border clashes between herders and farmers led to border closures, further dampening economic activity. Externally, Oil prices remain in a slump, the US Dollar is appreciating and global sentiment struggles with the COVID-19 circumstances.

Further elevating fears over a technical recession in Nigeria, the World Bank forecasts an economic contraction of 3.2 percent for the full-year 2020, a five percent drop from its previous projection.

Summing up, Nigeria’s outlook remains influenced by the same old themes. If Oil prices stay depressed, foreign currency reserves and government revenues will likely decline. Low Oil prices also impact the CBN’s capacity to defend the Naira. A falling Naira could accelerate inflation and further weigh on economic growth. Will the final quarter of 2020 see a continuation of these themes, or will the economy offer a positive surprise?

The banking sector remains a bright spot in the cloudy outlook. Easier borrowing terms might boost the banking sector’s income while encouraging economic activity. Another bright spot is that growth in China has returned, promising to hike demand in the Oil markets and further supporting Oil prices.

After the year we’ve had so far, one thing’s sure: surprises are only to be expected.

Dr. Ogbonnaya Onu, minister of Science and Technology, has said that the federal government plans to diversify the country’s energy supply sources to include renewable energy towards accelerating socio-economic development.

Dr Ogbonnaya Onu, minister of Science and Technology

Onu stated this when he declared open the forum on ‘Scaling-up interconnected mini-grids development in Nigeria’, ‎organised by the United Nations Development Programme (UNDP-GEF) and the Energy Commission of Nigeria, in Abuja.

He said that renewable energy will help the nation meet its electricity needs in a functional and sustainable manner, adding that it will also improve the quality of life in the country.

‎“Nigeria is endowed with substantial energy resources such as coal, crude oil and natural gas; renewables such as hydro, wind, solar, geothermal, waves and tides, as well as biomass.

‎‎“The challenge before us, has always been on how to efficiently transform these resources into adequate and reliable energy for national development using our enormous capacity in science, technology, innovation and entrepreneurship”, he said.

The minister explained that since the inception of the present administration in 2015, electronic power generation capacity had increased at an annual rate of about 390 megawatts per year.

He, however, said that while this is commendable, it could not adequately meet the needs of the country’s population and sustain the desired level of economic development.

Onu further observed that Nigeria’s desire to industrialise cannot be realised without adequate power supply.

He stressed that every effort must be made to ensure that homes, offices, factories, schools, hospitals and laboratories in the country have adequate, reliable and affordable electricity supply.

“Renewable energy could meet Nigeria’s energy needs in the area of job creation and improved standard of living in rural areas,” he said.

He added that the development of solar photo-voltaic (Pv) in the country triggered by increase in demand for rural water supply, lighting, health services and micro-enterprise needs to be regulated to stimulate private sector participation.

ROAM Africa (Ringier One Africa Media), the leading digital classifieds group in Sub-Saharan Africa, has released figures that highlight the current state of the jobs market in Africa, with one standard role attracting 2,417 applications.

Analysing 69,511 jobs listings from January 2019 to August 2020 across 5 African countries (Nigeria, Ghana, Kenya, Tanzania and Uganda), ROAM Africa’s data sheds more light on the challenges facing both job seekers and employers in the African jobs market.

The standard job listing that attracted 2,417 applications was for a Receptionist/Admin Assistant in Kenya while another listing for call centre agents and team leaders attracted 2,283 applicants.

Similar is observed also for other markets: In Ghana, 2,299 people applied for an Administrative Assistant role and 2,265 people in Tanzania applied for a Sales Representative role.

In Nigeria, the highest number of applications for a single role was 2,095 and it was for a Sales Representative role.

According to ROAM Africa’s data, Kenya contributed the highest amount of new job listings in 2019 with 33%. Nigeria was in second place with 31% and Uganda was in third place with 17%. However, so far in 2020, Nigeria is leading the way with 40% of new job listings, with Kenya in second place with 28% and Uganda in third place with 13%.

A closer look at ROAM Africa’s data reveals that, apart from Nigeria, there was a drop in overall job listings across all job levels during the last months.

However, there was an increase in graduate trainee and ‘no experience’ roles in Nigeria, Tanzania and Ghana from May to July 2020, which offers some hope for new entrants into the jobs market.

Interestingly, recruitment agencies contributed the most roles, with 16% of overall jobs, closely followed by IT and Telecoms with 15% and Advertising media and communications with 12%.

Some candidates have also reported applying for more than 20 jobs a day for multiple months and only getting to the interview stage on a handful of occasions. This is why ROAM Africa’s jobs platforms Jobberman (Ghana and Nigeria) and BrighterMonday (Kenya, Uganda and Tanzania) are focused on matching technology.

The company’s technology helps employers to identify and score the right candidates faster. Suitable candidates are made visible to prospective employers, and helped across the finish line by providing data driven career development tools and training programmes.

Job seekers using the platforms can expect to improve their CV, gain interview tips and sign-up for online training courses designed to bridge the gap between education and employment.

Commenting on the data, Clemens Weitz, CEO of ROAM Africa said, “The high ratio of applications per job listing really highlights how challenging the jobs market is for employers and job seekers.  Both employers and job seekers are struggling to connect with the right opportunities and more needs to be done to address this.

“Employers must rethink their hiring strategies and clearly define what they are looking for, based on data and insights. Job seekers must also invest in personal development that will make it easier for them to stand out in such a crowded and competitive market.”

Weitz also added that, “We believe that Africa’s greatest asset is its people and their entrepreneurial spirit. With the expected growth in the continent’s population, we must begin to put structures in place that will make it easier for African businesses to make the most of this resource.”

According to Hilda Kragha, Managing Director of ROAM Africa’s Jobs platforms, “With the current state of the jobs market, Africans cannot afford to continue with the antiquated recruitment processes that are commonplace in many organisations.

We must prioritise a digital approach to recruitment, which brings transparency to Africa’s labour market while connecting people to work opportunities that will improve their livelihood.

We must also embrace objectivity in the recruitment process by incorporating innovation that makes it easier to fairly and consistently sort for the best candidates. This will ensure that only qualified candidates are applying for roles and employers get an accurate picture of jobseekers’ capabilities. A win-win for both job seekers and employers.”

“Our data highlights both the challenge and opportunity that come with the African jobs market. We must address the challenge of rampant unemployment but also embrace the opportunity to transform how recruitment is done. By doing this, we will not only be addressing the current problems but also future-proofing our businesses and organizations for generations to come.”