By Babajide Komolafe
The need to support youth entrepreneurship as a solution to the increasing challenge of unemployment in Nigeria is reflected in the success story of Paystack, a fintech start-up company founded in 2016 by two Nigerian youths-Ezra Olubi and Shola Akinlade.
The company which became part of Stripe, an American technology company through a $200 million acquisition deal, currently employs more than 70 people in Lagos.
Like Ezra Olubi and Shola Akinlade, many Nigerian youths, driven by the need to escape the hash realities and unemployment in the country, are embracing entrepreneurship and venturing into different sectors of the economy.
While some like the Paystack founders have recorded outstanding success, most are struggling, due to several factors including poor power supply, low capacity and inability to access funding to scale up their businesses.
Recognising the rising trend of youth entrepreneurship as a solution to the nation’s 33.3 per cent unemployment rate and also the quest for economic diversification, the Central Bank of Nigeria (CBN) in recent times have introduced and deployed intervention measures specially tailored to empower youth entrepreneurs.
Youth Entrepreneurship Development Programme
Notable among these interventions is the Youth Entrepreneurship Development Programme (YEDP), introduced by the CBN to enhance the deployment of the ingenuity and resourcefulness of Nigerian youths for maximum economic development.
The objective of the programme is to fix the triple-barreled constraints of insufficiency, high cost and inadequate term of capital usually faced by youth entrepreneurs and startups. It offers credit of up to N3 million to eligible youth or N10 million for groups of three to five youths, interest rate of less than 10 per cent per annum. The tenor broadly depends on project complexity and cash flow, but is between one year for working capital loan and three years for term loan.
The collateral requirements include academic and NYSC certificates, third party guarantees and other movable assets.
Under YEDP, the target beneficiaries are members of the National Youth Service Corps (NYSC), non-NYSC (but not more than five years post-NYSC), those who possess a verifiable tertiary institution certificate, and artisans with First School Leaving Certificate or a technical certificate or accredited proficiency certificate from the National Board for Technical Education (NBTE), whichever is applicable. Beneficiaries can be encouraged to migrate to other CBN interventions to obtain more funding if they utilise the YEDP facility properly.
Eligible activities for finance under the programme include startups and expansion projects in agricultural value chains (fish farming, poultry, snail farming, etc.), cottage Industry, creative industry (tourism, arts and crafts) and Information and Communications Technology (ICT) among others.
Explaining the rationale for the programme, CBN Governor, Mr. Godwin Emefiele, said the programme was aimed at harnessing the teeming youth population in the country to propel that demography to the much-needed economic recovery.
While expressing worry over the huge unemployment level in the country, Emefiele said the situation could not be allowed to degenerate further, given the bright ideas and big dreams of the youth.
He stressed that the YEDP would provide timely and affordable credit to assist youths in implementing their business ideas, thereby providing the mechanism of stimulating growth, reducing unemployment as well as addressing youth restiveness.
Nigeria Youth Investment Fund
Another effort of the apex bank to promote entrepreneurship among Nigerian youths, is the Nigeria Youth Investment Fund (NYIF), introduced in collaboration with the Federal Government. The disbursement of the fund for the period of 2020 – 2023 was approved by the Federal Executive Council (FEC) last July.
The fund is also dedicated to investment in the innovative ideas, skills and talents of Nigerian youths between the ages of 18-35 years, and to institutionally provide them with a special window for accessing much needed funds, finances, business management skills and other inputs critical for sustainable enterprise development.
According to the framework, the NYIF aims to financially empower Nigeria youth to generate at least 500,000 jobs between 2020 and 2023. It also states that informal business enterprises (individuals and sole proprietors) and formal business enterprises (youth owned enterprises) are eligible to apply for the loan.
The framework however excludes applicants currently enjoying Nirsal MFB loans, including the Targeted Credit Facility (TCF) and Agribusiness/Small and Medium Enterprises Investment Scheme (AGSMEIS) loans that remain unpaid.
Also excluded from the Fund are beneficiaries of other government loan schemes that remain unpaid are also not eligible to participate.
The framework stipulates a maximum loan tenor of five years depending on the nature of the business and the assets acquired with an interest rate of 5 percent per annum.
The NYIF framework also outlines businesses and activities legally eligible to participate in the scheme to include: technology/innovation, agriculture and its related value chain, green economy and the renewable energy sector. Others are manufacturing, hospitality/tourism, construction, logistics and supply chain, healthcare value chain, the creative sector, trading and services, as well as others that would be certified by the CBN from time to time.
The administration of the N75 billion NYIF is mainly the responsibility of the Federal Ministry of Youth and Sports Development.
Commenting, Minister of Youth and Sports Development, Sunday Dare, explained that the NYIF underscored the importance placed on youths by the administration, saying the fund would be spread over three years to cater for youth-owned businesses and investment needs.
Accelerated Agriculture Development Scheme
In addition to the two initiatives above, the CBN also introduced the Accelerated Agriculture Development Scheme (AADS). Under the scheme, the CBN in collaboration with state governments aims to engage 370,000 youth in agriculture.
Under the scheme commercial banks are authorised to give up to N2 billion maximum loan to youths interested in agriculture. The loan, according to the apex bank, comes under the AADS at five per cent interest rate per annum.
In a circular announcing guidelines for the scheme, CBN Director, Development Finance Department, Yusuf Yila said the country’s population pyramid was bulging around the youth segment, with an estimated 75 per cent of the population identified to be aged below 35 years.
Commending the FG and the CBN for the initiative, the All-Farmers Association of Nigeria, which is the umbrella body of all farmers in Nigeria, noted that the intervention loan would really boost job creation through agro-allied value chains.
According to the Chairman of AFAN’s Lagos chapter Dr. Femi Oke, the AADS will open doors of opportunities for the teeming youths aspiring to go into agriculture.
Creative Industry Financing Initiative
Another intervention of the apex bank aimed at creating job opportunities for youths is the Creative Industry Financing Initiatives (CIFI) under which the CBN and the Bankers Committee aim to establish three Creative Industry Parks across the country.
This initiative effectively took off earlier this year with the commencement of the renovation of the National Theatre in Lagos.
The goal of the CIFI is to support startups and existing businesses in the creative industry space, as well as the development of a creative industry park across 3 major cities in Nigeria.
Explaining the rationale for the proposed creative industry parks, CBN Governor, Godwin Emefiele said: “Our goal through the establishment of these parks is to create an environment where startups and existing businesses can be incubated and rewarded for their creativity.
“In each of these parks, efforts will be focused on discovering the most innovative young entrepreneurs across the music, movie, fashion and IT industries. “Each park will be able to support skills acquisition for over 200,000 Nigerians. These individuals will be empowered with funds at single digit interest rate, state-of-the-art tools, high level training and networks that will enable them to turn their ideas into a reality. “When they are able to achieve this objective of creating a new music product, a high-quality movie, an IT software application, or a fashionable outfit, we will work to ensure that they are able to distribute their work on a large scale around the globe.”
Lagos Creative and Entertainment Industry
To serve as the pilot for this initiative is the development of the first creative industry park named the Lagos Creative and Entertainment Center (LCEC) around the nation’s 45 year old National Theater in Lagos State.
To achieve this the Bankers Committee, led by the CBN is committing N22 billion to the restoration and refurbishment of the upgrade of the National Theater and development of an ecosystem of creative hubs on the adjoining 44 Hectare parcel of land around the national icon.
Emefiele explained that, “The idea behind the Lagos Creative And Entertainment Centre,” is simple. Firstly, we seek to restore the glory of an iconic building by aligning most of the fabric and equipment and facilities in the building with the aesthetics of the 21st century, and secondly to develop an ecosystem of creative hubs on the adjoining 44 Hectare parcel of land. This new facility will complement and enhance the National Arts Theatre.
“The Bankers’ Committee is providing funding for a prototype cluster located to the north of the National Arts Theatre, a development which we have labelled the “Signature Cluster”. This facility will be a convenor – providing space, support network, business development and community engagement for the creative, cultural and technology sectors. The Signature Cluster will consist of a building each for Music, Film, Fashion and Information Technology verticals. In addition to these, a Welcome/Visitor’s Centre, Police and Fire Stations, and structured parking for up to 500 vehicles will be built.
“Consequently, the 44 Hectare site adjourning the National Theatre will be developed and utilised for the development of purpose-built creative hubs for the Fashion Industry, Music and Film as well as Information Technology (IT). The aim is to deliver a successful Creative and Entertainment city that will encourage additional investment into Nigeria’s creative industry.”
Impact on Economy
Speaking on the expected contribution of the LCEC to the nation’s economy, Governor Emefiele said: “We anticipate that there would be at least 10,000 direct and indirect jobs created during the construction of the Lagos Creative & Entertainment Centre.
“We also project that over 25,000 people would be engaged in different sections of the centre when the Signature Cluster is completed, with anticipated multiplier effect of other job opportunities.”