Can GSM Reduce Unemployment? Evidence from Minna, …jetems.scholarlinkresearch.com/Articles/Can GSM Reduce.pdfAge Bracket No. of Respondents Percentage 14-25 9 10.2 25-40 71 79.8

Journal of Emerging Trends in Economics and Management Sciences (JETEMS) 4(4):433-441 (ISSN: 2141-7016)

433

Can GSM Reduce Unemployment? Evidence from Minna, Nigeria

Ibrahim Gerarh Umaru

Department of Economics, Faculty of Social Sciences,

Nasarawa State University, Keffi-Nigeria. ________________________________________________________________________________________

Abstract The advent of global telecommunication system (GSM) in the early years of the new millennium in Nigeria as a result of new telecommunications policy has revolutionize the way individuals and organization interact, communicate and do business. While the official position was that within a short time, its gains could be seen, especially in terms of urban unemployment reduction, critics had stated that it was too early to say. This study assesses the validity of these claims by examining the state of urban unemployment and how GSM has helped in reducing same in Minna town, Nigeria as a case study. Combining survey with regression analysis, the study reveals that GSM is not contributing to generate revenue for the families of those engaged in the business as well as revenue to local authorities, but is helping to create jobs among the youth in the study area. To further consolidate these laudable gains, it is recommended that the local authorities should integrate the use of commercial GSM platform into its youth empowerment programme. To facilitate the articulation of a comprehensive and far-reaching policy on unemployment reduction in the state in the future, studies into rural unemployment and how GSM can help in creating jobs in its rural settlements is further recommended. __________________________________________________________________________________________ Keywords: GSM business; unemployment; Minna-Nigeria; Niger; telecommunications; economy INTRODUCTION Telecommunications has become one of the major economic infrastructures of modern times. Aside from being a medium of personal and cultural interaction, it serves as bridgehead between geographical barriers as well as enables businesses to connect, transact business and transfer services, products and value. In this regard, telecommunications is seen by scholars and policy makers as a double-edge weapon – lubricant to wealth creation and a platform for providing employment and reducing poverty, especially among the youth. Poverty and unemployment are two of the development challenges facing Nigeria (NCC Report, 2004; Tooki, 2005; Ndukwe, 2006; Umaru, 2007). This explains why successive governments in the last two decades, have used public policy as instrument of job creation. It is with this understanding that the Federal Government (FG) embarked on the telecommunications reforms otherwise referred to as the GSM Revolution, with the wide expectation of stimulating economic growth and development as it is an important enabler for growth through investment opportunities, human development, reduction in cost and time transaction, wealth creation and job creation (Debwenga, 2005; Fanawopa, 2006; Umaru, 2007: 25; Okafor, 2007). Perhaps this explains the fact that within a short time, virtually all the major towns, cities and villages were

connected to the mobile system. Since then, so much has been said about the introduction of GSM. While the official position was that the introduction of GSM had within the short time of its introduction done so much to provide jobs and help families to alleviate poverty, some critics argued that it had not done much. There is therefore the need to assess the validity of these assertions and to attempt to verify how, on the whole, the introduction of GSM has contributed in solving the nagging problem of urban unemployment in Nigeria. This study therefore sets out to examine these contentious issues, using Minna town, Nigeria as a case study. The relevant research questions for this study are:

1. How was the problem of unemployment like in Minna Town before the GSM revolution?

2. How has the GSM business helped in reducing the unemployment rate in Minna Town?

3. Can the mobile telecommunications business be used as a policy tool in the management of the unemployment problem in Nigeria State?

METHODOLOGY The Study Area This area for this study was Minna town, Nigeria. It is located within the northwestern region of Nigeria and lies between 6° 33’ 25’’ E in longitude and 9° 36’ 50’’ N in latitude. Minna is a city with a 2007 estimated population of 304,113 in west central

Journal of Emerging Trends in Economics and Management Sciences (JETEMS) 4(4):433-441 © Scholarlink Research Institute Journals, 2013 (ISSN: 2141-7024) jetems.scholarlinkresearch.org


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Nigeria. It is the capital of Niger state and the headquarters of Chanchaga Local Government. Niger is bordered in the north by Zamfara and Sokoto states, in the east by Kaduna state and the Federal Capital Territory; in the south west by Kwara state (Figure 1). Research Hypotheses This study has two hypotheses to test. These are: A. Impact of Telecommunications on Job Creation H0: Mobile telecommunication business has no

significant impact on job creation in Minna Town

B. Telecommunications Business as a Policy Tool H0: Mobile telecommunications business is an

appropriate tool to manage the unemployment problem in Niger State.

DATA AND METHOD In order to answer the three research questions raised above, both quantitative and qualitative data were used. However due to the general unavailability of secondary data in Nigeria and the study area in particular, especially on this subject, the research made recourse to primary data. Questionnaire and interview were used as research instruments to collect the requisite data for analysis. The first questionnaire was designed to source information from the general public on the state of telecommunications in Minna before and after the year 2002 and the state of unemployment in the town as well as the state in general; while the second aimed at sourcing information on business operations of GSM operators in Minna

. a) Map of Nigeria showing Niger state b) The study area (in circles)

Figure 1: Map of Minna showing the study area We used the 2006 Population Census figures as sampling frame as well as the standard mathematical formula (Casley et al., 1988; De Vaus, 1996; Lind et

al., 2002), [)]())1([( 222

22

skNENskn

], where

n = the required sample size; N = the survey

population; k = the value of the “converted” confidence limits of a normal distribution function; s2 = the variance of the variable of interest among the population; and E = the margin of error (or sampling error), to determine the total sample size of one hundred and sixteen (116) respondents for the study (Table 1). This number was randomly selected from the general public while 148 out of a census of 322


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operators were interviewed. The Random Number table was used as yardstick for the selection to ensure randomness. In distributing the questionnaire, three (3) trained field assistants were employed, while the main researcher conducted the interview himself. Street-corner commercial GSM operators and households with numbers on streets were used as sampling frame; while random sampling technique was used to select respondents from the general public and people as sample elements in Minna Town. A total sample size of one hundred and sixteen (116) respondents was selected from the general public while 48 out of a census of 122 operators were interviewed. In distributing the questionnaire, three (3) field assistants were employed, while the author conducted the interview himself. Table 1: Determination of sample size for the study Study Area

(Location)

Survey Population 2 % Margin Of Error

Allowable

Sample Size By

Location (Number) (Per

cent) Bosso 147,359 0.42 2,947.18 49

Chanchaga 201,429 0.58 4,028.58 67 Total 348,788 6,975.76 116 MODEL SPECIFICATION The study used statistical inference to test the validity of hypotheses A and B. That official statistics on unemployment and GSM are hard to come should not be obvious. What is more, studies on such problems are scanty. These two factors make the analysis or even make judgmental statements about unemployment a tall order. Recourse was thus made to ‘mining’ primary data. Unfortunately, such data may be subjective in nature, so much so that conclusions can only be conjectural. What theory and empirical studies therefore tend to suggest is the use of qualitative or probabilistic models (Baker, 1989; Pindyck and Rubinfeld, 1991). In view of this, we specify the model to be used in testing the second hypothesis as follows:

),,,( BLSFr GSMEFIfU (1) Where: Ur = unemployment rate in the family IF = Income of the family FS = Family size EL = dummy indicating educational level GSMB = dummy indicating whether the

respondent believes telecommunications business can reduce unemployment or not.

Binary logistic estimation procedure was used to estimate the relationship in equation (1). The underlying assumptions about the relationship between unemployment and income level, family size, educational level and promoting GSM business are as follows: 1. Higher income in the family has positive impact on employment and therefore a negative relationship between family income level and unemployment exists; 2. The larger the family size, the higher the chance that unemployment will be a problem in the family; 3. It is the general belief that the more educated the family members are, the higher the possibility that most members of the family will be gainfully employed, all things being equal; hence the postulate that there is a negative relationship between level of education and unemployment in a community; and 4. The actual relationship which tests the second hypothesis is that between the GSM business and unemployment rate. The assumption here is: promoting GSM business has a negative effect on unemployment. That is, the more the residents of Minna town get involved in the GSM business the more the tendency for the rate of unemployment to fall; and therefore a positive relationship is postulated here. DATA ANALYSIS Response Rate The response rate for the first questionnaire was high. Out of total of one hundred (116) copies administered, ninety two (92) were completed; however only eighty nine (89) were completed correctly and duly returned. This invariably translates to about seventy seven (77) per cent response rate. As for the second questionnaire, the response rate was one hundred (100) per cent. This was because field assistant were used to administer the question through the interview method. If this method had not been used, it would have been doubtful how the respondents would have agreed to answer questions bordering on the inner workings of their business. Socio-Demographics Table 2 shows the socio-demographic characteristics of the public-respondents. When asked to indicate the number of persons in the household who eat from the same pot, the picture in Table 3 emerged.


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Table 2: Sex, Age Distribution and Marital Status of Respondents Sex Distribution

Sex No. of Respondents Percentage Female 47 5 Male 39 45 Total 89 100

Age Distribution Age Bracket No. of Respondents Percentage

14-25 9 10.2 25-40 71 79.8 41-65 9 10.0

Over 65 89 100 Marital Status

Status No. of Respondents Percentage Married 12 14.3 Single 45 50.0

Divorced 26 28.6 Widowed 6 7.1

Total 89 100 Educational Qualification

Type No. of Respondents Percentage No education 0 0.0

Primary/Koranic 26 28.6 Secondary/Vocational 39 44.1

Tertiary 24 27.3 Total 89 100

Occupational Distribution Type No. of Respondents Percentage

Public sector employee 26 29.8 Private sector employee/employer 24 27.4

Self-employed 10 10.7 Full-time students 11 11.9

Unemployed 6 7.1 Retired/full housewife 12 13.1

Total 89 100 Sources: Author’s survey, 2009 Table 3: Average Size of Household of Respondents

Sources: Author’s survey, 2009 State of Telecommunications Services in Minna Town Respondents were asked to compare the state of telecommunications services before and after the advent of GSM in Minna Town. Virtually all of them described the state before the advent of GSM as either poor or very poor; while about 25 per cent of them describe its state after the advent of GSM as average, 47 per cent as good and 2.5 per cent as very good. Another question that respondents were required to answer is to compare their ownership of telephone lines and the number of networks available to them before and after the advent of GSM. Figure 1 and Table 4 show their responses.

Figure 4.1: A comparison of ownership of telephone lines and handset before and after the advent of GSM in Minna town Sources: Author’s survey, 2009 About 62 per cent, 56 per cent and 48 per cent of those respondents who indicated connection to at least a GSM network claimed to have access to MTN,

Size Number of Household Percentage 1-6 27 32.1

7-12 35 41.2 Over 10 22 78.9

Average size of household 8 persons


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Zain and Glo mobile services, respectively; while only 4.3 per cent indicated same for the oldest service provider, Nitel (fixed) and 24 per cent to its mobile GSM network. On the average, about 34.1 per cent of those respondents claimed to be connected to at least

a GSM service provider, meaning the teledensity for Minna town is 3 to every 100 person.

Table 4: Number of GSM Networks Respondents Accessible to Before and After the Advent of GSM in Minna Town

Network Before the Advent of GSM (%) After the Advent of GSM (%) Nitel (fixed) 12 0 Mtel (mobile) 0 0 MTN (mobile) 0 43 Zain (mobile) 0 56 Glo (mobile) Etisalat (mobile) Visafone (mobile)

0 0 0

66 23 12

Average 1.7 28.6 Sources: Author’s survey, 2009 Respondents as heads of households were also asked to indicate the number of handset they and the members of their household possess. While only 2 per cent of heads of respondents’ households claimed to possess telephone handsets prior to the advent of GSM, about 65 per cent indicated possession of at least one handset. As for the members of the respondents’ households, none had a handset before the advent of GSM; however, about 39 per cent claim to be in possession of at least one with the coming of GSM (see Figure 2). In order to find out if respondents perceive the advent of GSM as advantageous to individuals as well as the economy, they were required to identify the positive fallout of the development. Table 5 indicates their responses.

Figure 2: Ownership of Telephone Handsets Before and After the Advent of GSM Sources: Author’s survey, 2009 43 per cent, 38.6 per cent and 67.5 per cent indicated income generation, employment and ease of communication as the positive fallout of the GSM, respectively. 45 per cent and 54 per cent chose to identify facilitation of business and personal convenience as the advantages of GSM in Minna

Town. On the whole, about 50 per cent of respondents were of the opinion that GSM has contributed more to the economy of Minna Town than otherwise. Table 5: Positive Fallout of GSM in Minna Town

Fallout % of respondents who answered in the positive

Income generation 23.0 Employment 12.8

Ease of communication 89.1 Facilitation of business 52.0 Personal convenience 63.0

Average 48.0 Sources: Author’s survey, 2009 Lastly, respondents were asked to indicate if, on a good day, they would encourage any member of their household who is unemployed to engage in GSM business as preferred business to others. About 58.5 per cent answered in the affirmative. State of Unemployment in Minna Town Respondents were asked to indicate if they consider unemployment as a problem in their household as well as how many persons in their household are without job. About 65.8 per cent admitted unemployment as being a serious problem; while 45.3 per cent of them indicated at least one member of the household is without job. As to whether unemployment is a serious problem in the state as a whole, about 67.5 per cent would want to believe it is. A closely related question was did respondents believe Niger state government has the political will and resources to fight the teething scourge of unemployment in the state. The response was a resounding yes, as about 83.5per cent of them answered in the affirmative. As a follow-up question, respondents were asked to indicate which sector of the local economy the state government should focus on in order to fight the problem of unemployment. Their responses are shown in Table 6.


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Table 6: Suggested Priority-sector for Fighting Unemployment in the State Sector Agric Manufacturing Transportation Trading GSM Total

% of respondents in favour

42

10

23

12

13

100

Sources: Author’s survey, 2009 Finally, respondents were asked if they believe that the State government can adequately address the problem of unemployment through the GSM business. About 69 per cent answered in the positive and 56 per cent reaffirmed their answer.

Summary Statistics The summary statistics of the survey on public-respondents is shown in Table 7.

Table 7: Summary Statistics of the Public-respondent Survey in Minna Town Statistic Household

Income Family Size Rate of Unemployment Level of

Education Prob of GSM

Total number of observation 89 89 89 89 89 Mean 84,214 8 3 5 0.641 Expected value of mean* 213,211 Std. error of mean 10.216 0.7000 0.3712 1.98 3.321E-01 Median 23,650 6.0000 2 2.0000 0.423 Mode 32,038 4.00 6 0.00 Std. Deviation 13,532 1.6037 2.341 1.7435 0.021 * - Expected value [µ = E(X) = Σ{prob. [x.f(x)]}] Sources: Author’s survey, 2009

Nature of Telecommunications Business, Cost and Profitability in Minna Town A census of telecommunications operators (dealers, equipment vendors and call centers) in Minna Town undertaken by this study reveals that about 122 of them exist (Table 8).

Table 8: Census of Telecommunications Operators in Minna Town. Type of Business Number

Dealer 11 Exclusive equipment vendor 9

Equipment sales and maintenance agent 10 Street corner call centre 70

Total 122 Sources: Author’s survey, 2009 A survey of 48 of them produced the following picture about the operation, cost, patronage and

profitability of GSM operators as exhibited in Table 9.

Table 9: Nature of Operation, Cost, Patronage and Profitability

Source and Promoters of Telecommunication Business Source Personal

contribution Family source

Operator (retail)

Dealer (wholesale)

NGO Govt.

Take-off capital √ √ √ √ × √ Working capital √ √ √ √ × √

Fixed capital √ √ √ × × √ Equipment √ √ √ × × √

Licensing/ Franchise × × √ √ × √ Profitability of GSM Business

Service Very High High No too high Not at All Sale of handsets and equipment √ × × ×

Sale of GSM lines × √ × × Sale of recharge cards √ × × ×

Repairs and maintenance × √ × × Tax Rendition and Burden

Type Local government authority/

Agent

State government authority/

agent

NCC or Federal government

authority/agent

% of income paid as tax (average)

Dealer × √ √ 35 Exclusive equipment vendor √ × × 32

Equipment sales and maintenance agent √

×

×

31

Street corner call centre √ × × 20 Sources: Author’s survey, 2009


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Test of Hypothesis I The first hypothesis that needs to be tested is: has the advent of GSM helped in reducing unemployment in Minna Town? To do this we followed the five steps in hypothesis testing. Step 1: Null and Alternate Hypotheses Null Hypothesis H0: Mobile telecommunication business has no significant impact on job creation in Minna Town Alternate Hypothesis H1: H0 is not true. Step 2: Level of Significance A 5 per cent level was chosen for this test. Step 3: Test Statistic

nsXZ c /

(2) Where:

X = sample mean = population mean s = standard deviation n = sample size.

From Table 4.6, we can substitute the following as

values for these variables: X =4.5393; = 185.72; s = 2.7636; and n = 89. Substituting these into the

formula (2) yields the value for cZ as -6.949. Step 4: Decision Rule At 5 per cent level and allowing for a two-tailed test, the sampling distribution of the Z-statistic Step 5: Decision

Because cZ lies in the left tail of the z- sample distribution (Figure 4), we must reject the Null hypothesis which states that GSM business has had no effect on unemployment in Minna given available

data, for the proposition that there is 95 per cent chance that it has had tremendous impact on job creation in the town. Test of Hypothesis II To test the second hypothesis, equation (1) was estimated, the results of which is summarized in Table 9. From the result, it can be seen that the explanatory power of the model is reasonably high (McFadden r-square = 0.8532), as about 85 per cent of changes in unemployment rate is explained by the behavioural attributes of the households. In addition, three variables carry the correct sign, namely household income, family size and tendency for GSM to create jobs. However, in terms of relative importance in influencing unemployment, only GSM tendency and household income were statistically significant at 0.05 level in order of strength; while income and education were only significant at 0.10 level.

Table 10: Result of Regression Model to Test Hypothesis II Dependent Variable: UNEMPLOY Method: ML - Binary Logit Date: 03/18/09 Time: 20:17 Sample(adjusted): 17 81 Included observations: 11 Excluded observations: 54 after adjusting endpoints Convergence achieved after 4 iterations Covariance matrix computed using second derivatives

Variable Coefficient Std. Error z-Statistic Prob. INCOME -0.900111 0.007199 -1.300393 0.02131 EDUCAT 0.023192 0.439104 0.167567 0.05510 FAMILY 0.063101 0.129097 -0.748984 0.00231

GSM -0.000231 1.688047 -0.250922 0.06542 Mean dependent var. 0.79812 S.D. dependent var. 0.504525 S.E. of regression 0.524371 Akaike info criterion 1.740711 Sum squared resid. 1.924757 Schwarz criterion 1.885401 Log likelihood -5.573913 Hannan-Quinn criterion 1.649505 Avg. log likelihood McFadden R-sq.

-0.506719 0.853227

Obs. with Dep=0 4 Total obs 11 Obs. with Dep=1 7 Sources: Author’s survey, 2009

Reject H0

Accept H0

Zt =1.96 Zc

=20.49


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On the whole, because GSM tendency has the highest coefficient (0.423569) with the prob. value of 0.0189, it turned out to be the variable with the greatest influence on unemployment in Minna. The implication of this is clear: as far as the data available through our survey is concerned, there is reasonably reason to believe that the advent of GSM business has helped in managing the unemployment problem in Minna, thereby leading to the rejection of the null hypothesis of Hypothesis II. DISCUSSION With a population growing between 2.8 and 3.2 per cent, and the slow progress in revitalizing the real sectors of the economy, Nigeria will certainly have to do more to cope with the emerging challenges of the current global meltdown with its attendant fall in consumer spending and battered private confidence in future investments. At the lower level, states which collect paltry sums from the federation account as subvention and grants like Niger State will have to start looking inwards for alternative sources of funding to finance social and economic development as well as reduce poverty and unemployment - two of the evils bedeviling the state. In the absence of a comprehensive unemployment reduction programme for the state, the government would realize that sooner than later, a bold step in this direction would certainly be expedient, if anything at least for political reason. Though opportunities abound in virtually all sectors of its local economy in which mass jobs can be created, the telecommunications is surely one too fast growing and lucrative a sector to ignore in this regard. The findings of this study clearly demonstrate this fact. One of the reasons why the State government should take this window of opportunity serious is that GSM business not only creates jobs, it also contributes to raising household income, local, state and federal tax revenue. Another reason is that going by the happenings in the telecommunications industry, GSM will likely be an attraction to foreign and local investors in the foreseeable future as can be seen from the proliferation of new operators (such as Etisalat, Visa, Multilink and Starcomms), expansion in network coverage, diversification of telecommunications into broadband Internet and other multimedia services by operators. As the train of expansion and fast telecommunications business rolls on its tracks, more and perhaps better opportunities will be created for would-be agents, salesmen, technicians and dealers. Niger State Government cannot afford not to jump on the hype! This explains why now, than ever before, is the time for the government to marshal out a

telecommunications-related unemployment reduction programme for the state. CONCLUSIONS AND RECOMMENDATIONS The analysis of above data shows that the GSM business has contributed in creating jobs in Minna, thereby suggesting that there was a reduction in the rate of unemployment in the town. Also, the analysis shows that if handled properly, commercial GSM business can be a veritable tool in managing the problem of urban unemployment in the State. However, the above conclusion should be limited to the discussion on urban unemployment in Nigeria, for the study was restricted to the state capital, Minna Town, which is an urban settlement. Although current population projections seem to show that Nigerian towns and cities are among the fastest growing settlements in Africa, available statistics however suggest that rural unemployment is still a serious problem. Thus the study has told only one side of the story. In view of the above, we recommend that the state administration should consider integrating the GSM platform as one of the veritable tools to further reduce the urban unemployment situation in the state, perhaps by providing basic training and soft-revolving loan to prospective youth through its youth empowerment scheme already in place. Also to enable the state to articulate a comprehensive and far-reaching policy on reducing unemployment, there is the need for study on rural unemployment and how GSM can be effectively used to reduce unemployment. REFERENCES Baker, J.L. 2000. Evaluating the Impact of Development Projects on Poverty: A Handbook for Practitioners. Washington, D.C.: IBRD/World Bank. Casley, D.J., Kumar, K. and Mundial, B. (1988). Collection, Analysis and Use of Monitoring and Evaluation in Data. Johns Hopkins University Press. Baltimore, U.S.A. Debwenga, S. 2005. Doing business in Nigeria: the MTN way. A paper presented at the African Business and Investment Forum, Abuja. De Vaus, D.A. 1996. Surveys in Social Research 3rd edition. UCL Press, London. Fanawopa, S. 2006. GSM Firms Contribute N205b to Economy. www.sunnewonline.com. Lind, D.A., Marchal, D.W. and Mason, R.D. 2002. Statistical Techniques in Business and Economics 11th edition. McGraw-Hill/Irwin, Boston U.S.A..


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NCC Report. 2004. Trends in the Telecommunications Industry in Nigeria (1997-2004). A publication of the Corporate Planning and Research Department of the Nigerian Communications Commission. Ndukwe, E.C.A. 2006. Country’s experience in telecom market reforms in Nigeria. A Publication of the Nigerian Communications Commission. Okafor, E.N. 2007. GSM revolution and Employment Generation in Plateau State: A Case Study of Jos Town. B.Sc Research Project. Department of Economics, Niger State University, Minna-Nigeria. Pindyck, R.S. and Rubinfeld, D.L. 1991. Econometric Models and Economic Forecasts. McGraw-Hill, New York U.S.A. Tooki, A. 2005. Four years of GSM – the journey so far. Financial Standard (August 15.)

Documents

Can GSM Reduce Unemployment? Evidence from Minna, …jetems.scholarlinkresearch.com/Articles/Can GSM Reduce.pdfAge Bracket No. of Respondents Percentage 14-25 9 10.2 25-40 71 79.8