CBN and Youth Empowerment

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Hamid Ayodeji writes on some initiatives aimed at improving access to finance for youths and youth-owned enterprises in the country

Nigeria’s rising youth unemployment has remained a source of concern to policy makers in the country.

With unemployment rate as of fourth quarter (Q4) 2020 was put at 33.3 per cent by the National Bureau of Statistics (NBS), which was an increase from the 27.1 per cent recorded in the second quarter of 2020; and unemployment rate among young people (15-34 years) put at 42.5 per cent as of Q4, there have been deliberate efforts by institutions such as the Central Bank of Nigeria (CBN) to empower this class of persons in the country.

This was in recognition of the fact that there is no better segment of the Nigerian population than the youths to propel the country to its much-needed economic recovery and diversification.

For instance, the central bank had launched the Youth Entrepreneurship Development Programme (YEDP) to enhance the deployment of the ingenuity and resourcefulness of Nigerian youths for maximum economic development.

The YEDP aims 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 this intervention fund, 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.

The Guidelines for the programme indicate that activities eligible for financing 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.

CBN Governor, Mr. Godwin Emefiele, had said the programme was aimed at harnessing the teeming youth population in the country to propel that demography to the much-needed economic recovery.

Emefiele, who had decried the alarming unemployment figures from the Nigerian Bureau of Statistics, had said the situation could not be allowed to degenerate further, given the bright ideas and big dreams of the youth. The Governor 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.

Similarly, as part of efforts to encourage entrepreneurship among youths in the country, the central bank in collaboration with the federal government introduced the Nigeria Youth Investment Fund (NYIF). The Federal Executive Council (FEC) had last July, approved the disbursement of the fund for the period of 2020 – 2023.

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.

The framework among other things stated that 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. However, the framework notes that 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 are not eligible to apply.

Furthermore, it noted that beneficiaries of other government loan schemes that remain unpaid are also not eligible to participate. The loan tenor, according to the framework, is a maximum of 5 years depending on the nature of the business and the assets acquired with an interest rate of 5 percent per annum.

The CBN had outlined in the NYIF framework, the businesses and activities that are legally allowed to be eligible to participate in the scheme. These 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 Federal Ministry of Youth and Sports Development.

The Minister of Youth and Sports Development, Sunday Dare, had said 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.

Another targeted intervention is the Accelerated Agriculture Development Scheme (AADS).

Indeed, the apex bank authorised the commercial banks to give up to N2 billion maximum loan to youths interested in agriculture. The loan, according to the regulator, comes under the Accelerated Agriculture Development Scheme at five per cent interest rate per annum.
This was created by the apex bank in collaboration with state governments to engage 370,000 youth in agriculture.

According to the loan guideline released and signed by CBN Director, Development Finance Department, Yusuf Yila in Abuja, recently, the maximum loan accessible under the scheme shall be N2 billion per obligor. 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.

The All-Farmers Association of Nigeria, which is the umbrella body of all farmers in Nigeria, commended the federal government and the CBN, pointing out that the intervention loan would really boost job creation through agro-allied value chains.

AFAN’s Lagos chapter Chairman, Dr. Femi Oke, commended the central bank over the initiative. Oke noted that the move was in order since it was going to open doors of opportunities for the teeming youths aspiring to go into agriculture.

In addition, the Bankers’ Committee and the CBN recently commenced renovation work on the National Theatre in Iganmu, Lagos, in line with its efforts to support young entrepreneurs in the country.

In February, FEC had approved a memorandum of understanding (MoU) between the CBN and the ministry of information and culture for the project.

Minister of Information and Culture, Alhaji Lai Mohammed, said the project showed the commitment of all parties involved towards giving the facility a facelift. According to him, when completed, the National Theatre would be the number one event centre in Africa. He said there would also be the development of clusters to support the creative industry.

“Not only will the National Theatre be restored, there would not be a single job loss and more jobs would be created during the construction of the facility,” Mohammed said.

The project is being funded through the Creative Industry Funds Initiative (CIFI) of the Bankers’ Committee. The CBN and other members of the Bankers’ Committee had set up the Creative Industries and Financing Initiative through which banks set aside, on an annual basis, five percent of their profit after tax (PAT).

To Emefiele, who is the Chairman of the Bankers’ Committee, the idea behind the project, christened ‘Lagos Creative and Entertainment Centre,’ was to restore the glory of the iconic building by aligning most of the fabric, 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.

The new facility would complement and enhance the National Arts Theatre, he said.
“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,“ he added.

Emefiele stated that the 44-hectare site adjourning the National Theatre would be developed and utilised for the development of purpose-built creative hubs for the music, film, fashion and information technology.

He said the aim was to deliver a successful creative and entertainment city that would encourage additional investment into Nigeria’s creative industry.

According to him, the anticipation is that there will be at least 10,000 direct and indirect jobs created during the construction phase and 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.

“The fashion building is a full-fledged apparel production facility with textile showroom, retail and photography spaces and teaching laboratories
“The music building will house recording studios with all front and back-end spaces and facilities. An amphitheatre has been designed to adjoin the music hub in the master plan.
“The film facility consists of stage set-up areas as well as all back-end spaces necessary for full production of films.

“The information technology facility consists of co-working and co-living spaces, training facilities and indoor and outdoor breakout clusters, all carefully designed to ensure that interface with the creative users is enhanced,” Emefiele added.

He said the Bankers’ Committee embarked on the project because of the rapid growth recorded by the creative sector over the years.

“This project will no doubt bring considerable benefits to all Nigerians, especially the youth who are the reason and inspiration behind this initiative. The tenacity of our youth is highly commendable and admirable and has reflected in the economic returns of the creative industry. Their activities, through the music, film and fashion industry, have also brought global acclaim to Nigeria,” Emefiele said.