Obinna Chima writes on efforts by the Central Bank of Nigeria to develop entrprenuerial spirit among youths in the country
Nigeria’s high unemployment rate which stood at 33.3 per cent as of the fourth quarter of 2020, as well as the rate of poverty, mean that the country is effectively seating on a massive keg of gun powder.
More worrisome is the rising case of youth unemployment as young men and women leave universities, polytechnics and Colleges of Education every year with little hope of securing jobs.
That is why there has been increasing call for tertiary institutions to do more in the area of entrepreneurial studies so that students would be prepared to venture into any business of their interest.
Globally, entrepreneurs play significant roles in economic transformation, contribute massively to innovation, wealth creation and in improving the standards of living in any nation.
Desirous of promoting entrepreneurship among students, the Central Bank of Nigeria (CBN) Governor, Mr. Godwin Emefiele, has expressed the preparedness of the bank to collaborate with universities in designing a framework for entrepreneurship development in order to arrest rising youth unemployment.
Emefiele, while delivering the 51st Convocation Lecture of the University of Lagos recently, urged universities to begin sending requests to the CBN for research or for some form of training on entrepreneurial development.
The topic of his lecture was: “National Development and Knowledge-Economy in the Digital Age: Leapfrogging SMEs in the 21st Century.”
Emefiele also pledged the CBN’s readiness to increase its development finance interventions to support micro, small and medium scale enterprises (MSMEs).
According to him, since the introduction of the Youth Entrepreneurship Development Fund (YEDP), one of the bank’s development finance initiatives, there has been limited access by fresh school leavers.
He said: “This is to support our youths who are graduating so that rather than going out to seek employment from
companies, that they can on their own access finance, both grants and loans that would aid them in setting up their own business, thereby creating jobs not just for themselves, but for others as well. That is what I think we should begin to think about at this time.
“Given population growth and the increasing number of graduates, we need to begin to see how SMEs can be incorporated and supported.
“Closing from this lecture today, we would be writing to all universities, to begin to conduct some kind of entrepreneurship development competition programme.
“If you truly say you are a graduate of agriculture, are you coming out of the university to begin to look for a job in a company or you are graduating with your certificate to go into agriculture business? So, we would like to encourage universities.”
He said the bank’s Development Finance team would soon write to universities to develop a framework under which this can be done, adding that is one aspect where the bank can begin to stimulate the entrepreneurial skills in the youth.
He highlighted how critical vibrant and growing small businesses are to the growth of the economy and the creation of jobs for Nigerian youth.
He stated that special consideration needed to be given to strengthening physical and ICT infrastructure to enable SMEs to perform more efficiently and become globally competitive.
He added that the potential of SMEs in enhancing economic growth was hampered by limited access to finance, inadequate infrastructure and poor digital penetration.
Emefiele urged governments at all levels and the private sector to provide more support in addressing the challenges of SMEs.
According to him, as users of new technology, policies should incentivise the adoption of innovations that will improve SMEs competitiveness and productivity.
“In the 21st century, we have witnessed ground-breaking innovations and growth in several countries, stemming from significant investments in building a knowledge-based system that enables greater application of technologically driven research and innovation,” he said.
The CBN governor explained that technology is not only reshaping how knowledge is shared but also how goods and services are produced and traded, adding that it is also redesigning the various modes of payments for goods and services towards systems that enable faster and more efficient settlement of payment transactions.
“Today, the emergence of digital platforms such as Amazon and Alibaba have provided SMEs with a significant ability to expand their operations by enabling them to sell and deliver their products to customers that are not within their immediate environment,” he added.
According to him, a digitalised and knowledge-driven economy can accelerate the growth and development of SMEs as well as create new opportunities to strengthen productivity, especially in the services industry.
He listed countries such as India, China, Korea and Singapore as having continued to harness the benefits of the knowledge economy to accelerate economic growth, largely, through the contributions of SMEs.
He tasked all stakeholders to deepen reforms that will improve human capital development through skills enhancement and proper linkage of research to the SME sector.
Emefiele charged tertiary institutions to tap into the educational trends that are drivers of productivity in advanced and emerging markets, in order to reshape the curriculum, enhance the learning experience of students and foster innovation among the faculty and staff.
On the role of the CBN in the development of SMEs, Emefiele said the bank had rolled out massive developmental interventions in some critical sectors of the Nigerian economy, especially in agriculture, manufacturing and SMEs.
Emefiele congratulated the graduating students and urged them to take advantage of some of the bank’s programmes aimed at supporting SMEs such as the SME Credit Guarantee Scheme (SMECGS); Micro, Small and Medium Enterprises Development Fund (MSMEDF); Agri-business/Small and Medium Enterprises Investment Scheme (AGSMEIS); Creative Industry Financing Initiative (CIFI); Targeted Credit Facility (TCF) and the Nigeria Youth Investment Fund (NYIF).
One of the most recent schemes targeted at channelling low-interest wholesale funds to the MSME segment is the MSMEDF. This scheme, which charges nine per cent interest rate has recorded the disbursement of over N83.9billion to 216,704 beneficiaries as at the end of 2020. The obligor limit ranges from N500,000 for micro enterprises to N50 billion for SMEs financed by DMBs/DFIs. Also, the initiative offers 10 per cent of the total loans for start-up businesses, two per cent to economically active persons living with disabilities (PLWD) and 60 per cent of the Fund’s wholesale component dedicated to women entrepreneurs or women led MSMEs in order to promote financial inclusion.
Another intervention is the AGSMEIS, an initiative of the Bankers’ Committee, in collaboration with the CBN that was also set up to improve access to affordable and sustainable finance by agri-businesses and MSMEs. This has enhanced the creation of productive employment opportunities and boost the managerial capacity of agri-businesses and MSMEs. So far, a total of N111.7 billion has been disbursed to 29,026 beneficiaries.
Furthermore, a N50 billion Targeted Credit Facility was introduced in March 2020, as a stimulus package to cushion the effects of COVID-19 pandemic on households and MSMEs across the country. So far, under AGSMEIS and the bank’s targeted credit facility, over N111.7 billion and N253.4 billion have been disbursed to 29,026 and 548,345 beneficiaries, respectively.
The central bank also launched several youth investment-friendly programmes and interventions to empower Nigerian youths with necessary inputs to build successful SMEs and other businesses.
One of such schemes is the YEDP which was launched in 2016, to enhance the deployment of the ingenuity and resourcefulness of Nigerian youths to achieve maximum economic development. Under the scheme, a total of N173.4 million has been disbursed to over 67 beneficiaries.
The target beneficiaries are members of the National Youth Service Corps (NYSC), non-NYSC (but with not more than five years post-NYSC), holders of verifiable tertiary institution certificates, and artisans with First School Leaving Certificate or a technical certificate or accredited proficiency certificate from the National Board for Technical Education (NBTE).
Relatedly, the Federal Executive Council on July 22nd, 2020 approved the sum of N75 billion for the establishment of the Nigeria Youth Investment Fund (NYIF) for the period of 2020 – 2023 to be funded by the CBN. The objective of NYIF is to improve access to finance for youth and youth-owned enterprises for national development. Under the scheme, N2.04 billion has been disbursed to 7,057 beneficiaries, of which 4,411 were individuals and 2,646 SMEs.
Furthermore, the bank established the Creative Industry Financing Initiatives (CIFI) aimed at improving access to long-term, low-cost financing to entrepreneurs and investors. It covers a wide range of sub sectors in the creative industries, some of which include, movie and music production, fashion and ICT.
Among the target opportunities is the graduate software development loan. While the disbursement is in phases, in line with the agreed milestone, a sum of N3.1 billion has so far been disbursed to 341 beneficiaries.
Another area championed by the Bank towards SMEs development relates to entrepreneurship and youth training.
The CBN in 2006 in collaboration with Small and Medium Enterprises Agency of Nigeria (SMEDAN), National Directorate of Employment (NDE), National Poverty Eradication Programme (NAPEP) and Industrial Training Fund (ITF), began the establishment of Entrepreneurship Development Centre (EDC) across six geo-political zones of Nigeria. The centres were mandated to develop entrepreneurship spirit amongst Nigerians and provide insight into the tools, techniques, and framework for managing all functional areas of business enterprise, including production, marketing, personnel, and finance. These initiatives have significantly helped to bridge the skilled labour gap among SMEs.
Furthermore, the bank has provided substantial support to some selected higher institutions in the country in order to enhance training, and quality. This formed the basis for the construction of centres of excellence in eight Universities across the country, two of which have been completed, with others at various stages of development.
“As SMEs continue to play strategic roles in strengthening national economies and creating jobs, the catalytic roles of knowledge and innovation is essential for delivering more inclusive growth.
“With the abundant resources at our disposal, including a large population of over two 200 million, natural resources and favourable climate among others, extensive measures must be put in place to accelerate the development of the economy and to make it more globally competitive. In this regard, the following policy options should be considered,” Emefiele added.
According to him, special consideration should be given to the strengthening of physical and ICT infrastructure to enable SMEs perform more efficiently and become globally competitive. He also said there should be increased efforts towards accelerated diffusion of technology among SMEs.
“As users of new technologies, policies should incentivise the adoption of innovations that will improve SMEs competitiveness and productivity. Deepening reforms that improve human capital development through skills enhancement and proper linkage of research to industry will improve the performance of SMEs.
“Increased access to finance for start-ups and SMEs is highly essential. In this regard, the CBN stands ready to increase its development finance interventions to further support the sector.”
It is expected that the move by the central bank Governor will help in deepening entrepreneurial spirit amongst tertiary institutions’ students in the country.
