IDEAS home Printed from https://ideas.repec.org/a/ags/afjecr/264461.html
   My bibliography  Save this article

Unemployment Menace and the Fallacy of Microcredit Policy in Nigeria

Author

Listed:
  • Abdullahi, Ibrahim Bello
  • Sakariyahu, Ola Rilwan
  • Olatunji, Abdulganiy

Abstract

This study examined the issue of unemployment and the impact of microfinance banks’ credit facilities on its reduction for the period of 22 years between 1992 and 2014. The study employed secondary data obtained from Central Bank of Nigeria and National Bureau of Statistics. The data obtained was subjected to stationarity and cointegration tests with the use of Augmented Dickey-Fuller (ADF) and Phillips-Perron (PP) tests. Furthermore, ordinary least square regression was employed in analyzing the relationship between the dependent variable (unemployment rate) and the independent variables (microfinance banks’ credit facilities, gross domestic product, interest rate and inflation). The outcomes of the study show that three independent variables (microfinance banks’ credit facilities, interest rate and inflation) at 5% alpha level have significant impact on unemployment while gross domestic product was found not to have any significant impact on unemployment. The study concludes that credit facilities provided by microfinance banks do not actually go to deserving individuals or borrowers, thus, having no impact on reducing the menace of unemployment in the country. The study therefore recommends that the Central Bank of Nigeria re-evaluate the performances of the operating microfinance banks in order to ascertain the proportion of their loan portfolio that actually goes to the “unemployed but creative youths”. In addition, the CBN must as a matter of urgency take necessary action in ensuring that loans granted by microfinance banks are serviced at a single digit interest rate as applied in countries like Kenya and Bangladesh. This is because employment generation and overall economic development can only be achieved when entrepreneurial youths can access credit facilities at affordable interest rate.

Suggested Citation

  • Abdullahi, Ibrahim Bello & Sakariyahu, Ola Rilwan & Olatunji, Abdulganiy, 2016. "Unemployment Menace and the Fallacy of Microcredit Policy in Nigeria," African Journal of Economic Review, African Journal of Economic Review, vol. 4(2), July.
    • Handle: RePEc:ags:afjecr:264461
    DOI: 10.22004/ag.econ.264461
    as

    Download full text from publisher

    File URL: https://ageconsearch.umn.edu/record/264461/files/136055-364465-1-SM.pdf
    Download Restriction: no
    File URL: https://ageconsearch.umn.edu/record/264461/files/136055-364465-1-SM.pdf?subformat=pdfa
    Download Restriction: no
    File URL: https://libkey.io/10.22004/ag.econ.264461?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Donatella Gatti & Christophe Rault & Anne-Gael Vaubourg, 2012. "Unemployment and finance: how do financial and labour market factors interact?," Oxford Economic Papers, Oxford University Press, vol. 64(3), pages 464-489, July.
    2. Misbah Tanveer Choudhry & Enrico Marelli & Marcello Signorelli, 2012. "Youth unemployment rate and impact of financial crises," International Journal of Manpower, Emerald Group Publishing Limited, vol. 33(1), pages 76-95, March.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Marelli Enrico & Sciulli Dario & Signorelli Marcello, 2014. "Skill mismatch of graduates in a local labour market," Экономика региона, CyberLeninka;Федеральное государственное бюджетное учреждение науки «Институт экономики Уральского отделения Российской академии наук», issue 2, pages 181-194.
    2. Donatella Gatti, 2021. "Protecting Natural and Social Resources: A political economy approach," CEPN Working Papers hal-03374129, HAL.
    3. Giovanni S F Bruno & Enrico Marelli & Marcello Signorelli, 2014. "The Rise of NEET and Youth Unemployment in EU Regions after the Crisis," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 56(4), pages 592-615, December.
    4. Liotti, Giorgio, 2020. "Labour market flexibility, economic crisis and youth unemployment in Italy," Structural Change and Economic Dynamics, Elsevier, vol. 54(C), pages 150-162.
    5. António Afonso & M. Carmen Blanco-Arana, 2024. "Unemployment and Financial Development: Evidence for OECD Countries," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 66(4), pages 661-683, December.
    6. Kraemer-Eis, Helmut & Lang, Frank & Torfs, Wouter & Gvetadze, Salome, 2016. "European Small Business Finance Outlook: December 2016," EIF Working Paper Series 2016/37, European Investment Fund (EIF).
    7. Ekrame Boubtane & Dramane Coulibaly & Christophe Rault, 2013. "Immigration, Growth, and Unemployment: Panel VAR Evidence from OECD Countries," LABOUR, CEIS, vol. 27(4), pages 399-420, December.
    8. Dromel, Nicolas L. & Kolakez, Elie & Lehmann, Etienne, 2010. "Credit constraints and the persistence of unemployment," Labour Economics, Elsevier, vol. 17(5), pages 823-834, October.
    9. van Dijk, Mathijs A. & van Dalen, Hendrik P. & Hyde, Martin, 2020. "Who bears the brunt? The impact of banking crises on younger and older workers," The Journal of the Economics of Ageing, Elsevier, vol. 17(C).
    10. Leroy, Aurélien & Pop, Adrian, 2019. "Macro-financial linkages: The role of the institutional framework," Journal of International Money and Finance, Elsevier, vol. 92(C), pages 75-97.
    11. Calero, Carla & Gonzalez Diez, Veronica & Soares, Yuri S.D. & Kluve, Jochen & Corseuil, Carlos Henrique, 2017. "Can arts-based interventions enhance labor market outcomes among youth? Evidence from a randomized trial in Rio de Janeiro," Labour Economics, Elsevier, vol. 45(C), pages 131-142.
    12. Luis René Cáceres, 2021. "Youth Unemployment and Underdevelopment in Honduras," International Journal of Economics and Finance, Canadian Center of Science and Education, vol. 13(2), pages 1-61, February.
    13. Godwin Aloyce Myovella, 2018. "Socio-economic Factors that Determine Employment in Tanzania: Spatial Analysis," Business and Economic Research, Macrothink Institute, vol. 8(1), pages 154-163, March.
    14. Camp, Kevin & Waldorf, Brigitte, 2014. "The impact of spatial flexibility on unemployment duration in young college-educated workers," 2014 Annual Meeting, July 27-29, 2014, Minneapolis, Minnesota 170678, Agricultural and Applied Economics Association.
    15. Dunsch, Sophie, 2017. "Youth and gender-specific unemployment and Okun's law in Germany and Poland," Discussion Papers 397, European University Viadrina Frankfurt (Oder), Department of Business Administration and Economics.
    16. William Baah-Boateng, 2016. "The youth unemployment challenge in Africa: What are the drivers?," The Economic and Labour Relations Review, , vol. 27(4), pages 413-431, December.
    17. Hans Dietrich, 2013. "Youth unemployment in the period 2001–2010 and the European crisis – looking at the empirical evidence," Transfer: European Review of Labour and Research, , vol. 19(3), pages 305-324, August.
    18. Sheilla Nyasha & Nicholas M. Odhiambo & Mercy T. Musakwa, 2022. "Bank Development and Unemployment in Kenya: An Empirical Investigation," Managing Global Transitions, University of Primorska, Faculty of Management Koper, vol. 20(2 (Summer), pages 85-107.
    19. Thibault Darcillon, 2016. "Do Interactions between Finance and Labour Market Institutions Affect the Income Distribution?," LABOUR, CEIS, vol. 30(3), pages 235-257, September.
    20. Chiara Mussida & Dario Sciulli, 2023. "Being poor and being NEET in Europe: Are these two sides of the same coin?," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 21(2), pages 463-482, June.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ags:afjecr:264461. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: AgEcon Search (email available below). General contact details of provider: https://www.ajol.info/index.php/ajer/index .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.