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Development and the Entrepreneurial Challenge

11 Jan 2013

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POLICY & EXECUTION By Tunde Lemo

Development has many dimensions. On balance, it is connected to improvements in human capacity, living standards and overall societal well-being. For a nation to attain development, its social, economic & political institutions must be in tandem with the Millennium Development Goals (MDGs). Within this framework, Nigeria is rated one of the developing countries with slow progress in education, gender equality, income equality, employment generation, wealth creation and poverty.

The United Nations identifies youths as individuals between the ages of 15 and 24, while the Federal Government of Nigeria defines them as all young persons of the ages 18-35 years. By this definition, the youths constitute some two-thirds of the country’s population; making them the critical mass of the instruments of national development.  As at 2011, the average youth unemployment rate was an appalling 46.5%.

The Organisation for Economic Cooperation & Development (OECD) characterizes entrepreneurship as a motivating force for initiating business ideas, mobilising human, financial and physical resources for establishing and expanding enterprises and creating jobs. Given the Nigerian youth unemployment situation, entrepreneurship remains the viable option to create jobs and reduce poverty. Entrepreneurship empowers them to develop their businesses, pursue their dreams and contribute to overall productive capacity and national development.

The Nigerian National Youth Policy, 2001 aptly describes the role and importance of youths in the development process: “Youths are one of the greatest assets that any nation can have. Not only are they legitimately regarded as the future leaders, they are potentially and actually the greatest investment for a country’s development. They serve as a good measure of the extent to which a country can reproduce as well as sustain itself. The extent of their vitality, responsible conduct, and roles in society is positively correlated with the development of their country.”

Youth are the leaders of tomorrow and partners of today. Young people are social catalysts for progressive change as well as the most active group in the productive labour force. Their involvement in national development should aim to build their skills and capacities and provide them opportunities to engage effectively towards societal progress. Investments in youths should start at an early age and run through maturity; thereby, enabling them to cope with contemporary challenges.

The economic benefits of youth participation in development process are varied. Youth empowerment has multiplier effects on the national economy, including boosting productivity, wealth creation, consumption and tax revenue.  The rate of development of a country depends largely on how productive and creative the youths are.  Since youths constitute about 70% of Nigeria’s population, the nation cannot achieve development when they are mostly idle and unproductive.  This is the basis for their productive engagement in entrepreneurship.

In the last decade and a half, various efforts had been initiated by government and other stakeholders to provide employment for the youths in Nigeria. They include the programmes on Universal Basic Education, Poverty Eradication, Agricultural Development, Economic Empowerment & Development, Commodity Marketing & Development, as well as Presidential Initiatives on such vital commodities as cassava, rice, cocoa, vegetable Oil, livestock and fisheries.

Currently, there various interventions of government as well as the Central Bank of Nigeria (CBN) to positively engage the youths in national development.  In 2012, the CBN set up a N200 billion Micro, Small & Medium Enterprises (MSMEs) Development Fund to provide cheap and long-term financial resources for the development of the MSMEs sector in Nigeria. 60% of the Fund will be targeted at women entrepreneurs, and the key elements include credit, insurance, capacity building and interest draw-back.

The National Directorate of Employment (NDE) grooms unemployed youths and retired persons in vocational skills, entrepreneurship/business development, labour-based works, rural employment promotion and job placement guidance and counselling.  The Federal Government earmarked N100 billion Textile Revival Fund for the Cotton, Textile and Garment Industries, which used to be among the largest employers of labour in the country.  

*The Small and Medium Enterprises Development Agency of Nigeria (SMEDAN) was established to promote the development of the MSMEs sector of the Nigeria economy. Tremendous outcomes have been recorded from its various programmes, including the Entrepreneurship Development Programme.

* The Public Works and Women/Youth Empowerment Scheme (PW/WYE) was launched by the Federal Government to create immediate employment opportunities for women and youths in labour-intensive public works. To be implemented in partnership with the state & local governments and the private sector, the scheme is expected to generate 50,000 skilled jobs and 320,000 unskilled job opportunities. It is a component of the Subsidy Re-investment and Empowerment Programme (SURE-P).

The Youth Enterprise with Innovation in Nigeria (You WIN) programme is a collaboration of the Federal Ministries of Finance, Communication Technology and Youth Development to organise an annual Business Plan Competition (BPC) for aspiring young entrepreneurs in Nigeria. The programme will provide a one-time Equity Grant of 1 million—N10 million to 1,200 selected aspiring entrepreneurs to start/expand their business concepts and mitigate start up risks; and to further generate some 80,000--110,000 new jobs for unemployed Nigerian youths over a three-year period.

The Niger Delta Amnesty Training Programme has been engaged in the training of youths at various institutes in Ghana, South Africa, the Philippines, Russia, Ukraine, India and elsewhere. Also, more than 5,000 youths have been enrolled in formal educational institutions and vocational centres within and outside the country. To date, over 5,000 beneficiaries have graduated in such skill fields as welding & fabrication, entrepreneurship, pipe-fitting, carpentry & plumbing, oil drilling, electrical installation, ICT, and marine-related vocations.

* The Petroleum Technology Development Fund (PTDF) was established to promote and upgrade petroleum technology and manpower development through research and training of Nigerians as graduates, professionals, technicians and craftsmen in the fields of engineering, geology, geo-sciences, management, economics and relevant fields in the petroleum and solid minerals sectors, here and abroad.

There are various Micro-Finance Schemes providing financial services to the poor who are traditionally not served by conventional financial institutions. Currently, there are 873 Micro-Finance banks (MFBs) in Nigeria, employing more than 12,000 Nigerians. Their combined portfolios include 905,099 and 8,241,706 borrowers and depositors respectively.
The NYSC Venture Price Competition was introduced by the CBN to sensitize and create awareness in Nigerian youths, awaken their entrepreneurship expertise, and orientate serving youth corps members towards seeking alternative employment options, in particular, self-employment.

The N200 billion Commercial Agriculture Credit Scheme (CACS) finances large ticket projects along the agricultural value chain, in addition to the older Agricultural Credit Guarantee Scheme (ACGS).  To date, the CACS has disbursed N158.39 billion for 203 projects owned by 175 private promoters and 27 state governments & the FCTA, with 5,910 jobs created. The Nigeria Incentive-Based Risk Sharing System for Agricultural Lending (NIRSAL) is a partnership of the CBN, UNIDO and Alliance for a Green Revolution in Africa. It was developed to boost access to bank financing for agriculture by de-risking the agricultural and financial value chains through the adoption of risk-sharing approaches.

The N200 billion Refinancing/Restructuring of SME/Manufacturing Fund is to enable banks refinance and restructure their existing loan portfolios to SMEs and manufacturing firms. So far, the scheme has improved staff strengths, capacity utilisation and turn-over of 499 benefiting companies.  The Power & Aviation Intervention Fund (PAIF) has disbursed some N144.60 billion to Deposit Money Banks (DMBs) for 10 power and 11 aviation projects as well as generated numerous jobs.  The N200 billion Small & Medium Scale Enterprises Guarantee Scheme (SMECGS) of the CBN promotes further SME access to credit. In barely two years, the scheme has disbursed over N1 billion to 20 qualified applicants, with the attendant boosts in their businesses and employment generation.

The Entrepreneurship Development Centres (EDCs) were set up in the six geo-political zones to bridge gaps in various elements of youth entrepreneurship development. To date, over 102,000 youths have benefited from the initiative.  Since government cannot solely create for all youths and others, there are imperatives for private sector-driven entrepreneurial development. These include reduction in crime and social vices, improving economic conditions for business viability, guaranteed future for the country and improved self-worth of Nigerian Youths.

Meanwhile, the youth is also faced with enormous challenges in their quest for participation in national development. Issues such as improper orientation of youths, weak institutional capacity, lack of social safety nets policy, disconnect between academic qualifications and work process and improperly-focused budgetary provisions can be identified as some of the challenges confronting these national potential.  The recommended policy focus should incorporate improving infrastructure as modern infrastructure supports business environment in any economy.

Also, provision of agricultural incentives for young farmers and improving fiscal support for SMEs which contribute to sustainable growth and employment generation should be considered.  The introduction of Unemployment Compensation Policy as a strategy to reduce poverty, crime and other social vices should also be favourably considered.
In conclusion, the global consensus that the youths represent the future should continue to motivate policy makers to put in more efforts to ensure that young people are adequately equipped to prosper in this dynamic world.

*Mr. Lemo is the Deputy Governor (Operations), Central Bank of Nigeria

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