By Franklin Alli

THE Organised Private Sector, OPS, has hailed the Bank of Industry (BOI) for the N2 billion Graduate Entrepreneurships Fund it unveiled three weeks ago to tackle youths unemployment in the country.

OPS, however, requested the bank to bring down the interest rate on the loan to five percent from the current nine percent. Speaking exclusively with Vanguard, Chief Bassey Edem, OPS Chairman/ President, NACCIMA, said: “The initiative by the Bank of Industry is very commendable and in the right direction as it would help in reducing unemployment and effective engagement of the youths in our country if the money so allocated to this segment is properly applied.”

Commenting on the interest rate, he said “The question of the interest rate at 9 percent works two ways. For an established business, or existing entrepreneur the 9 percent interest rate is considered adequate since it is a single digit interest rate which businesses are clamouring for. However, the interest rate of 9 percent for start-ups is hardly adequate. Instead, we wish to propose at most a 5% interest rate plus a moratorium period of not less than one year from the date the loan is approved. This is a fair suggestion considering the myriad of issues such as preparation and sufficiency in utilizing the funds at hand.”

Chief Edem said the OPS would also want the bank to adopt the models that is in vogue in developing economies whereby new business ventures take their roots from existing one. “They may diversify their operations depending on areas of interest or expertise. This model which emphasizes a period of internship, mentoring and effective supervision guarantees that problems associated with start-ups are minimized. This model should be adopted to safe-guard against the hiccups usually associated with Start-ups.

Period of internship

“Also we would prefer that before the loan is advanced to such budding entrepreneur they should be made to pass through a compulsory period of internship to enable them master the craft inherent in the business before being allowed to practice independently. In other words, where all these conditions are fulfilled, when the capacity of these young graduates are built to enable them face the challenges associated with growing a business of their own, it is then time to provide the loan.

“As alluded earlier the initiative is very commendable but must be properly channelled to achieve the intended results. There must be a mechanism to ensure that the so called ‘Bankable Business idea’ is developed after or during a period of effective internship, supervision and mentoring.

“Such internship ensures competency on the part of the graduate who opts to be an entrepreneur. As a way of measuring the readiness of such persons, their ability to produce the so called bankable business proposals would be determined during this period. It is usually during this period that people develop innovative skills to do their things differently and develop or create new inventions. Since individuals tend to develop expertise from consistent practice, this proves to be one sure way that guarantees the success of start-ups.

“For emphasis, the internship period should be between 12 – 18 months to attract the right calibre of persons with genuine commitment to the program. What this internship period does for such promoter of a business is to sharpen their skills and expose them to the secret of the business as well as the market potentials inherent in the types of business strategies they adopt and informed choices they make regarding the future of their businesses and consequently the choices made to pen their proposals. It is at this point when they have acquired requisite experience for the business they intend to run that loans can be given to the promoters to pursue their line of interest.

“Experience has shown that because of lack of capacity and interest point, most business ventures fail. Ordinarily people venture into business areas they are not adequately prepared for. This should not be the case, that is why the mandatory internship period earlier proposed is critical to success of any businesses especially start-ups.  Start-up companies demand extra care, commitment, patience and good nurturing apart from Capital, to ensure their success during the formative periods. For a young graduate, some degree of care is needed to make the new outfit work. Mind you, I am not saying that this operates in all cases but considering the requirements to make start-ups work; much still needs to be done to cross that bridge,” he said.