Do Oil Rents Affect Unemployment Rates in Net Oil Exporting African Countries?

Abstract

The positive impact of oil rents on the general outlook of economic performance in oil-rich African economies cannot be overemphasised. Unemployment has over the years been a critical macroeconomic indicator of economic performance that represents a huge thorn in the flesh to policy makers in oil-rich African countries. The rate of unemployment is probably one of the key areas in which government’s accountability for the equitable management of the abundant natural oil resource may be assessed either directly or indirectly by the citizenry. What is the relationship between oil rents and unemployment rates in Africa, using the top 8 net oil exporters as the yardstick? This paper therefore aimed at testingl the impact of oill rents on unemploymentl in 8 oil-abundant, top oil net exporting African countries, (Nigerial, Algerial, Angolal, Egyptl, Tunisial, South Sudan, Gabon, and the Democratic Republic of Congo) spanning the period 1999-2018, usingl the Pooledl Mean Groupl (PMG) estimator. The PMG estimator was preferentially chosen over the Mean Group (Estimator) based on the outcome of the Hausman Specification Test. The mainl outcome of the studyl indicatedl that oill rent in the 8 top oil net L exportingl African countriesl had al significantly negativel influence onl unemployment rate inl the long-runl. However, crude oil pricel significantly and positively impactedl on the unemployment rates of these countries in the long-run. Oil rents however, exhibited no causal impact on unemployment in the short-run atl the countryl specific-levell exceptl for Egypt. This research is particularly useful for policy makers in countries that have recently discovered and commenced the production and exportation of crude oil in commercially viable quantities. Policy makers in any oil producing and exporting country can also benefit from the outcome of this research.