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Nigeria's education system is producing more qualifications than market-ready skills, creating a growing mismatch with the needs of a changing labour market, according to a new analysis. The country is expanding the number of people passing through schools and universities, but the skills emerging from the system are not keeping pace with what employers need, from foundational literacy and numeracy to digital, analytical, technical and entrepreneurial capabilities. That mismatch is becoming an economic problem.

Nigeria needs workers who can analyse data, build financial and economic models, develop software, use artificial intelligence, solve business problems and create new enterprises, yet weaknesses in learning and skills development mean education is not consistently translating into productive employment, higher earnings and stronger productivity. This places the country's progress towards Sustainable Development Goal 4, particularly its target on relevant skills for employment, decent work and entrepreneurship, under pressure. The World Bank's latest human-capital assessment puts the scale of the problem in stark terms.

Nigeria's deficits in nutrition, education and workforce skills are estimated to amount to 111 percent of future labour earnings. The assessment also gives Nigeria an education score of 64, compared with a median of 88 for lower-middle-income countries. Tertiary completion is 11.3 percent, above the sub-Saharan African average of 10.5 percent but below the 17.6 percent average for lower-middle-income countries.

The numbers suggest that Nigeria's challenge is not simply producing educated people. It is converting education into usable human capital. That conversion matters because the labour market itself is changing.

The traditional route from school to university to formal salaried employment is no longer the only path into economic activity. Nigerians are increasingly earning through data analysis, data science, software development, cybersecurity, digital marketing, financial modelling, economic modelling and other technology-enabled services. The creative economy provides another example.

Content creators, skit makers, video producers, podcasters and other digital entrepreneurs can now turn production skills and audiences into commercial opportunities. These activities should not be mistaken for evidence that Nigeria has solved its employment or skills problem. They demonstrate instead that the market is increasingly rewarding what people can do, alongside and sometimes independently of formal qualifications.

That creates a problem for an education system still heavily judged by enrolment, years of schooling and certificates. A university degree can demonstrate that a student completed a programme. It does not necessarily demonstrate that the graduate can interpret a dataset, construct a financial model, produce an economic forecast, write software, use AI productively or solve a practical business problem.

Nigeria's labour-market structure makes that gap more consequential. The National Bureau of Statistics reported an informal employment rate of 93 percent in the second quarter of 2024, highlighting the limited reach of conventional formal employment. In an economy where most workers operate outside formal wage employment, the ability to create value independently through a business, professional service, technical skill or digital activity becomes particularly important.

The education system therefore has to serve two labour markets at once: the formal economy that needs specialised professionals and the much larger informal economy in which workers often have to create their own opportunities. This is where SDG 4.4 becomes more than an education target. It calls for an increase in young people and adults with relevant skills, including technical and vocational skills, for employment, decent work and entrepreneurship.

Nigeria needs schools to establish strong literacy, numeracy and critical thinking; universities and technical institutions to provide relevant specialist and digital skills; and employers to provide the workplace training through which skills become productive experience. The measure of success should therefore move beyond how many Nigerians enter school, graduate or collect certificates. The harder question is what those qualifications produce.