Mr. Godwin Emefiele, governor of the Central Bank of Nigeria (CBN), is widely acclaimed for having made Youth Entrepreneurship Development one of the key functions of his robust development banking programmes. Right from his inaugural speech, the governor clearly defined a policy focus that centre on economic development aimed at reinforcing productive activities and creating employment opportunities.
The path of propping up the productive sectors necessarily crosses the territory of the Nigerian youth that constitute the dominant productive workforce of the nation but who are largely excluded from the active labour force due to rising unemployment. “At the CBN, we are concerned about the level of unemployment within the youth population and we are taking steps to address it’’, Emefiele said.
How to run an inclusive economy that places the youth in the forefront of entrepreneurship- based economy has been a major preoccupation of Emefiele, particularly as the Nigerian economy faced recession in 2015. His strategy is the use of coordinated interventions to build new capacities in key production sectors of the economy, optimising the financial catalyst role of the bank.
Youth empowerment programme has been given its proper place in this strategy. Emefiele’s regime at the CBN has witnesses an effective engagement of CBN’s development banking capacity, giving birth to an elaborate development financing programme that is now in force.
The CBN launched its Youth Entrepreneurship Development Programme (YEDP) in March 2016 to propel the harnessing of the ingenuity and resourcefulness of the Nigerian youth for accelerated economic development. This is in clear understanding of the critical role of Nigeria’s youthful population in entrepreneurship – which has become the growth driving force in a modern-day economy.
The programme was fashioned as a tool to tap the latent entrepreneurial spirit of the teeming youth by providing timely and affordable finance to implement their business ideas. It is positioned as a sustainable mechanism to stimulate employment, contribute to non-oil gross domestic product and address the challenge of youth restiveness.
YEDP is structured as an effective instrument to fix a tripod of funding constraints discovered to stand in the way of youth entrepreneurs and startups. These are insufficiency of start-up capital, high cost of funds and unfavourable terms of available credit.
Under the programme, business loan is provided to the tune of N3 million to eligible youth while a group of 3 to 5 youth can get a loan of up to N10 million. The credit is provided on soft terms with interest rate of 9 percent per annum and a tenor of one year for working capital and three years for term loan. Collateral requirements are tuned down to the level of the youth – academic and National Youth Service Corps (NYSC) certificates, third party guarantees and other movable assets.
Target beneficiaries under the programme are serving members of the NYSC and non-current NYSC but not more than five years post-NYSC. Eligible also are the youth who possess verifiable tertiary institution certificates, artisans with First School Leaving Certificate or a technical certificate or accredited proficiency certificate from the National Board for Technical Education, whichever is applicable.
The programme is funded from Micro Small and Medium Enterprises Development Fund
(MSMEDF). Beneficiaries are given opportunities to migrate to other CBN interventions to access increased funding if they utilize the YEDP facility satisfactorily.
Activities eligible for financing under the programme include startups and expansion projects in agricultural value chain (fish farming, poultry, snail farming, etc.), cottage industry, creative industry (tourism, arts and crafts) and information and communications technology (ICT), among others.
Another intervention scheme of the CBN is its Tertiary Institutions Entrepreneurship Scheme (TIES), which offers bigger funding than YEDP. The scheme, which offers a start-up loan of N5 million per participant, is targeted directly at entrepreneurship development with the objective of boosting the businesses embarked upon by the youth, create employment and contribute to economic growth.
According to Emefiele, the scheme was designed to create a paradigm shift among students and graduates of tertiary institutions in Nigeria from white-collar jobs towards
entrepreneurship development. The apex bank developed the programme in collaboration with universities and polytechnics in Nigeria to make participants ready for the scheme ahead of time.
The CBN governor is pressing on with his goal to make Nigerian graduates job creators rather than job seekers after graduation. This, he said, has since become the way for graduates in other parts of the world. “What we are doing today is something that is taken for granted in other climes”, he said.
He described the scheme as an innovative financing model that correlates with the complexity and dynamics of small businesses with the aim of bridging their financing gaps and enhancing access to low-cost credit to drive development.
TIES consists of three components, which include the term loan that provides direct credit opportunities to graduates of Nigerian polytechnics and universities of not more than seven years post-graduation. Equity investment component is designed to support start-ups, existing businesses requiring expansion and ailing businesses seeking resuscitation. Development grant component aims at raising awareness and visibility of entrepreneurship among undergraduates of Nigeria’s tertiary institutions.
NPower programme is another of the CBN’s youth empowerment scheme that took off in 2016. It was established to help tackle youth unemployment, alleviate poverty in the country and increase social development. The scheme was structured as a component of National Social Investment Programme to provide a platform for large scale and relevant work skills acquisition and development and to enable participants learn and practice what is necessary for them to find or create work.
The scheme focuses on unemployed graduates and non-graduates between the ages of 18 and 35 years. It is a paid programme for a two-year duration under which beneficiaries are engaged in their states of residence.
The CBN has equally made a remarkable intervention in youth empowerment through its
Micro, Small and Medium Enterprises Development Fund (MSMEDF). The fund is provided to spur growth of small and medium-sized businesses and enable them make major contributions towards achieving a balanced economic structure and even development across sectors and sub-sectors of the economy.