Nigeria’s employment challenge is often framed as a national problem requiring federal solutions. However, findings from the Nigeria Economic Summit Group (NESG) suggest that states that rely heavily on public employment are unable to create jobs at the scale required to match Nigeria’s rapidly growing labour force.
According to data analysed by the NESG and the National Bureau of Statistics (NBS), the public sector employs more wage earners than the private sector in a significant number of Nigerian states. In fact, in about 13 states, government accounts for over 40 percent of all wage employment, a pattern that underscores how shallow formal private-sector activity remains across much of the country.
Dr. Wilson Erumebor, principal economist at NESG, analysed the findings during an interview , said that the real battle for job creation must be fought at the state level, where government, not the private sector, remains the dominant employer of wage labour.“If we must create jobs, it is the private sector that creates jobs,” Erumebor said. “That means states must begin to think deliberately about building economic hubs, regional hubs, and new zones for prosperity.”
“When you look at many states, you see that government employs more workers than the private sector. That alone tells you how small the formal private sector is across states”, Erumabor pointed out.
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A labour market built around government paydays
Economic activity, Erumebor explained, is often concentrated around state capitals and peaks around the disbursement of federal allocations.
“You go around states across the country and you see that activities are clustered around state capitals,” he said. “Sometimes when FAAC allocation comes in, activities get busy. That tells you there is still heavy dependence on government, as opposed to a deep and broad private sector.”
This structure, he argued, is incompatible with large-scale job creation. Governments can absorb only a limited number of workers, and fiscal pressures make further expansion unsustainable.
Why national unemployment numbers tell only half the story
The urgency of state-led job creation becomes clearer when Nigeria’s headline unemployment figures are placed in context. Following the adoption of the International Labour Organization (ILO) methodology, Nigeria’s unemployment rate fell to 4.3 percent, a figure comparable to some advanced economies.
But Erumebor warned that such statistics risk masking deeper structural weaknesses.
“We should not look at unemployment in isolation,” he said. “Saying 4.3 percent makes it look like everything is fine, but it is not.”
One of the most telling indicators, he noted, is informal employment, which accounts for 93 percent of all jobs in Nigeria.
“That is extremely high,” he said. “It means people are working, yes, but the real question is: are they earning enough to take care of their families? Are they working in conditions that offer stability, protection and dignity?”.
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Hustle, not Jobs: The reality of work in Nigeria
Each year, an estimated 3.5 million Nigerians enter the labour market, but the economy is unable to generate enough formal jobs to absorb them. With labour-intensive sectors struggling and private-sector growth remaining weak, many workers are pushed into petty trading, subsistence agriculture, POS operations and other survival activities.
Beyond informality, Nigeria’s labour market is also dominated by self-employment. NESG data shows that about 85 percent of workers are self-employed, compared to just 15 percent in wage employment.
“What this tells you is that Nigerians are hustling,” Erumebor said “Formal jobs are very scarce. That is why wage employment is just 15 percent of the labour force.It is really, really low.”
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States at the centre of the solution
He argues that reversing these trends requires a shift in how job creation is approached, which is away from centralised, federal-level thinking and towards state-driven economic strategies.
States, Erumebor said, must focus on expanding private-sector activity beyond government offices and urban centres.
“We need to move businesses out of narrow clusters and create new economic zones,” he said. “That is how you generate jobs at scale.”
This approach, he explained, is particularly critical in states where government already employs a disproportionate share of wage workers. Without deliberate efforts to grow private enterprise, these states risk deepening their dependence on public payrolls.
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Jobs, poverty and a national priority
According to Erumebor, over 60 per cent of Nigerians are multidimensionally poor, despite recent signs of macroeconomic stabilisation.
“The next level, if we are serious about lifting people out of poverty, is jobs, and not just jobs, but better jobs”, he emphasised.
Creating those jobs, he stressed, must become a national priority, driven by coordinated action across federal and state governments, and anchored in private-sector expansion.
“How jobs are created matters,” he said. “How states engage the private sector matters. And how economic activities spread beyond state capitals matters.
