Dealing with Unemployment Challenge

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James Emejo urges tertiary institutions to take advantage of the Central Bank of Nigeria entrepreneurship scheme and contribute to solving the country’s increasing unemployment and social challenges

Unemployment constitutes one of the most glaring macroeconomic challenges faced by the current administration besides inflation and other variables. The country’s worsening insecurity has been linked to the lack of jobs for the teeming youth population.

According to figures from the Bureau of Statistics (NBS), 23.18 million Nigerians are currently unemployed while the country’s unemployment rate rose to 33.3 per cent in the fourth quarter of 2020 (Q4 2020) compared to 27.1 per cent in Q2.

It implied that there was an additional 1.42 million persons added to country’s unemployment portfolio when compared to 21.77 million unemployed persons in Q2.

According to the Labour Force Statistics: Unemployment and Underemployment Report (Q4 2020), a combination of both unemployment and underemployment rates stood at 56.1 per cent for the reference period.

Of the particular interest is the fact that unemployment rate among young people (15 to 34 years) increased to 42.5 per cent from 34.9 per cent while the rate of underemployment for the same age group declined to 21.0 per cent from 28.2 per cent in Q2.

Poverty Statistics

Moreover, rising unemployment has often been associated with the increasing level of poverty in the country.

The statistical agency last year said more than 83 million Nigerians are currently living below the national poverty line, and put the current poverty rate at 40.1 per cent.

The national poverty line is determined by adding the food poverty line and cost of non-food basic needs. The current value of the poverty line set at N137,430 per person per year, indicating that individuals living in households whose per capita annual consumption expenditure is below the threshold are regarded as poor by national standards.

Earlier in October 2018, also, the United Nations Development Programme (UNDP) in collaboration with the NBS had released the Nigeria Human Development Report 2016, which estimated Nigeria’s poverty index at 53.7 per cent.

Unemployment as Major concern

Nigeria’s unemployment crisis had been a major source of concern to both fiscal and monetary authorities in recent times. The adverse impact of insecurity has cost the country foreign investments among others as investors age-long high appetite has drastically reduced due largely to the unfavourable investment climate despite policy reforms. It has variously been argued that no investor would be enticed to commit resources to areas where security is not guaranteed.

Analysts have described the bulging youth population, without corresponding increase in available opportunities, as a time-bomb if not urgently addressed.

Role of Tertiary Institutions

For one, the ivory towers have particularly been berated for running short of providing solutions to some of the societal problems currently bedeviling the country.

Universally, higher institutions of learning pioneer research efforts, which have ended in producing solutions to issues confronting humanity. There is no gainsaying the fact that major breakthrough in innovation and advancement in research and human endeavour emanated from universities and their equivalent across the world but tertiary institutions in the country appeared to have fallen short of these attributes. Thousands of graduates are turned out annually from tertiary education into the already- saturated job market – almost all of them seeking white-collar jobs, which are almost non-existent.

Apex Bank’s intervention

However, to reverse this trend, the Governor of the Central Bank of Nigeria (CBN), Mr. Godwin Emefiele, last week, formally launched the apex bank’s N500 million Tertiary Institutions Entrepreneurship Scheme (TIES), a move which had been commended in view of these challenges.
The intervention will help to solve the issue of lack of access to finance opportunities to budding entrepreneurs whose ideas often perished for lack of support.

According to the CBN governor, the intervention would create an enabling business environment that supports innovation and enable the youth to unleash their entrepreneurial potential, by redirecting their focus from seeking white-collar jobs to embracing a culture of entrepreneurship.

Essentially, the initiative, which the CBN governor hinted at earlier this year, is expected to boost entrepreneurship in higher institutions of learning as well as create the environment to provide support in re-orientating, training, and providing a financing model apt to the peculiarities of the sector within which the businesses operate.

Emefiele, at the launch of the scheme in Abuja, urged government at all levels to evolve policy measures to support entrepreneurial development among the youth in the country adding that this was particularly crucial given that about 600,000 students graduate yearly from Nigerian tertiary institutions without commensurate employment opportunities in both the public and private sectors.

He said the essence of the intervention was to create a paradigm shift from the obsession for white-collar jobs among graduates and promote entrepreneurship. He said the CBN was particularly concerned about the current level of unemployment among the youth population.

He explained that the intervention consisted of three main components, including term loan, equity investment, and development grant.

Emefiele said the scheme would make it easy for youths to access credit and create jobs for themselves and others.

He warned that the finance to be provided was not a grant but a loan, which should be used for the intended purposes, adding that entrepreneurship remained an integral part of any economy and remarked that entrepreneurs play a key role in driving growth and innovation, which in turn results in job creation.

He explained that this is in line with its mandate of ensuring monetary and price stability, and its developmental mandate of ensuring inclusive growth in the economy, noting that the central bank had introduced several programmes to create an ecosystem that allowed the flow of affordable credit to the real sector.

The CBN Governor noted that these interventions were industry-led and designed to support the resilience of targeted priority sectors and segments for growth and job creation.

Emefiele said, “With an estimated population of 213 million, out of which two-third are youth, aged under 35 years, the nation is faced with a historic opportunity, particularly as the demography continues to create clear evidence of their relevance to economic development, as accentuated by the global recognition of Nigerian tech start-ups and continued growth of businesses in the technology space owned by the youth.

“In realisation of this, the CBN has introduced several innovative financing programmes designed to extend low-cost financing to youth entrepreneurs across the country. These interventions have continued to receive resounding commendations, as they have proven effective in extending credit to youth entrepreneurs across the country.”

Essentially, he said TIES was conceived as part of measures to promote entrepreneurship development among the graduate and undergraduate youths of Nigerian polytechnics and universities, with the release of the implementation guidelines and the opening of a portal for submission of applications in October 2021.

The scheme aims at providing an innovative financing model that will support the development of innovative entrepreneurial ideas among graduates and undergraduates of tertiary institutions in the country, the CBN governor said.

Body of Experts Constituted

The ceremony also witnessed the inauguration of the Body of Experts (BoE) by the CBN governor. The body, chaired by the Group Managing Director/Chief Executive, Sterling Bank Plc, Mr. Abubakar Suleiman, among other professionals, seeks to evaluate and rank entrepreneurial presentations made by the tertiary institutions under the development (grant) component.

Emefiele said members of the body were professionals of impeccable standing, drawn from the academia, professional bodies, and industry. He said part of their job was to recommend projects with high potential and transformational impact for grant awards.

Emefiele said the official launch of the TIES and subsequent inauguration of the BoE for the scheme’s development component was a testimony to the important role the youth play in building new blocks for economic growth, particularly as national growth was highly dependent on strong and competitive businesses.

He said bridging their financing gaps and enhancing access to low-cost credit to drive development of business was a task that could only be addressed by an innovative financing model that correlates with the complexity and dynamics of these small businesses.

Emefiele said the scheme was designed to address three verticals of the segment namely, term loan component, which provides direct credit opportunities to graduates of Nigerian polytechnics and universities of not more than seven years post-graduation.

He said an applicant, if successful, should be eligible for a maximum of N5 million for an individual, sole-proprietorship or small company; and a maximum of N25 million for a partnership or company.

The tenure of the facility is a maximum of five years, with a one-year moratorium, and at an interest of five per cent per annum, which shall revert to nine per cent from March 2022.

The pilot phase of the scheme is presently being implemented through the Bank of Industry (BOI) with the development of an application portal and processing of submitted applications.

The equity investment component is designed to support start-ups, existing businesses requiring expansion, and ailing businesses seeking resuscitation, and shall be implemented under the bank’s AGSMEIS equity window.

The investment limit shall be subject to the limit prescribed by the AGSMEIS guidelines and the investment period not more than 10 years.

Emefiele also noted that the development grant component was aimed at raising awareness and visibility of entrepreneurship among undergraduates of Nigerian tertiary institutions. He explained that here, polytechnics and universities in the country shall compete in a national biennial entrepreneurship competition where undergraduates are presented by the tertiary institutions to pitch innovative entrepreneurial or technological ideas with transformational potential.

According to him, three top institutions at the regional levels shall proceed to the national level, where the top five shall be awarded grants ranging between N120 million and N250 million.

He insisted that the grant awards should be used by the tertiary institutions solely for the development of the award-winning ideas.

Further commenting on the genesis of the scheme, Emefiele said, “As you are all aware, at the occasion of the 51st convocation of the University of Lagos, in July 2021, I delivered the convocation lecture, titled, ‘National Development and Knowledge Economy in the Digital Age: Leapfrogging SMEs into the 21st Century.’ At that event, I promised that the central bank would seek fresh collaboration with the nation’s tertiary institutions to develop entrepreneurship programmes, and to support – through the provision of access to finance – graduates and undergraduates who have bankable ideas, to bring the ideas to fruition.

“Engagements have been on-going between the central bank and the leadership of some of our tertiary institutions regarding the framework for an innovative financing model that will support entrepreneurship development among our graduates and undergraduates.

“This launch of the Tertiary Institutions Entrepreneurship Scheme today, is a culmination of the engagements and fulfillment of that promise.”
Highlights of the event included the presentation of commemorative cheques to five youth entrepreneurs whose proposals were found worthy of CBN’s financing under the pilot scheme.

Scheme’s Commendations

Speaking during the launch of the initiative, Secretary to the Government of the Federation (SGF), Mr. Boss Mustapha, hailed the efforts of the Central Bank to ensure that the economy remained afloat despite the disruptions occasioned by the COVID-19 pandemic.

Represented by the Director, Public Affairs and Bilateral Relations, Office of the SGF, Mr. Olakunle Fashina, Mustapha said, not only would the TIES boost economic growth and reduce graduate unemployment but it would also provide well-grounded incentives for the ever-growing graduate population.
He urged the tertiary institutions to deploy merit in the selection of the proposed beneficiaries of the scheme as well as monitor key performance indicators as applications are submitted.

Also, on his part, Minister of Education, Mallam Adamu Adamu, described the intervention as a laudable effort by Emefiele to promote entrepreneurial skills in the ivory towers. He said the CBN was playing a significant role in laying a solid foundation for technological development in the tertiary institutions.

The Minister, who was represented by the Ministry’s Director, University Education, Mrs. Rakiya Iliyasu, said no country could make appreciable growth in sound technological innovation and sustainable development without focusing on the base, which is the institutions responsible for training the students in the fields of agribusiness, information technology, creative industries among others.

He said it was on record that the scheme was designed to create a paradigm shift among graduates from the pursuit of white-collar jobs to entrepreneurship geared towards job creation and economic growth.

Analysts also believed that the scheme would awaken the institutions to their role to stimulate employment generation in the country.

Emefiele’s interest in ensuring that tertiary institutions lived up to their mandates of playing active role in resolving societal challenges, dated back to April when he challenged the university community to rise to the occasion and develop breakthrough solutions especially in seeds production to improve agricultural yields.

The CBN governor had, while delivering the guest lecture, titled, ‘Jump Starting the Agricultural Revolution: the CBN Experience’, at the combined convocation of the Federal University of Agriculture, Makurdi, Benue State, noted that the seed industry is a multi-billion dollars investment, offering a low hanging fruit in a potential collaborative effort between the CBN and the university community.

He had promised to provide a commercial outlook to research breakthroughs on improved seeds by ensuring a guaranteed market by encouraging farmers to adopt those seeds under the Anchor Borrower Programme (ABP) among others.

Nonetheless, Emefiele said the official launch of the TIES and subsequent inauguration of the BoE for the scheme’s development component was a testimony to the important role the youth play in building new blocks for economic growth, particularly as national growth was highly dependent on strong and competitive businesses.

He said bridging their financing gaps and enhancing access to low-cost credit to drive development of business was a task that could only be addressed by an innovative financing model that correlates with the complexity and dynamics of these small businesses.

Emefiele said the scheme was designed to address three verticals of the segment namely, term loan component, which provides direct credit opportunities to graduates of Nigerian polytechnics and universities of not more than seven years post-graduation.

He said an applicant, if successful, should be eligible for a maximum of N5 million for an individual, sole-proprietorship or small company; and a maximum of N25 million for a partnership or company.

The tenure of the facility is a maximum of five years, with a one-year moratorium, and at an interest of five per cent per annum, which shall revert to nine per cent from March 2022.

The pilot phase of the scheme is presently being implemented through the Bank of Industry (BOI) with the development of an application portal and processing of submitted applications.

The equity investment component is designed to support start-ups, existing businesses requiring expansion, and ailing businesses seeking resuscitation, and shall be implemented under the bank’s AGSMEIS equity window.

The investment limit shall be subject to the limit prescribed by the AGSMEIS guidelines and the investment period not more than 10 years.

Emefiele also noted that the development grant component was aimed at raising awareness and visibility of entrepreneurship among undergraduates of Nigerian tertiary institutions. He explained that here, polytechnics and universities in the country shall compete in a national biennial entrepreneurship competition where undergraduates are presented by the tertiary institutions to pitch innovative entrepreneurial or technological ideas with transformational potential.

According to him, three top institutions at the regional levels shall proceed to the national level, where the top five shall be awarded grants ranging between N120 million and N250 million.

He insisted that the grant awards should be used by the tertiary institutions solely for the development of the award-willing ideas.
Further commenting on the genesis of the scheme, Emefiele said, “As you are all aware, at the occasion of the 51st convocation of the University of Lagos, in July 2021, I delivered the convocation lecture, titled, ‘National Development and Knowledge Economy in the Digital Age: Leapfrogging SMEs into the 21st Century.’

“At that event, I promised that the central bank would seek fresh collaboration with the nation’s tertiary institutions to develop entrepreneurship programmes, and to support – through the provision of access to finance – graduates and undergraduates who have bankable ideas, to bring the ideas to fruition.

“Engagements have been on-going between the central bank and the leadership of some of our tertiary institutions regarding the framework for an innovative financing model that will support entrepreneurship development among our graduates and undergraduates.

“This launch of the Tertiary Institutions Entrepreneurship Scheme today, is a culmination of the engagements and fulfillment of that promise.”

Beneficiaries’ Testament

Meanwhile, one of the highlights of the TIES launch was the presentation of commemorative cheques to five youth entrepreneurs whose proposals were found worthy of CBN’s financing under the pilot scheme.

Speaking in an interview with THISDAY, some of the beneficiaries attested to the fact that there were no intermediaries in the application and selection processes for accessing the funds and vowed to make good use of the opportunity to expand their enterprises and create more jobs.
One of the beneficiaries, Miss Aisha Suleiman, a graduate of Applied Biology from the Bayero University, Kano, who is into cashew production said the facility will help her acquire machinery to boost production and employ addition hands.
She said there was no interference, adding that she got the link to the portal from a friend. She said her good business plan could have brought her good fortunes.

She told THISDAY in an interview, “I think I have a better business plan and my business is like out-of-the – box and it’s not so common. I chose the business because where I am situated or where I stay we have more of cashew tree and so utilising the nuts is great. It’s an opportunity and it’s a business opportunity.

“I intend to use my money to buy more machinery because before now we take out nuts for nut shelling and grading but with this money I’ll get mine.”
Also one of the initial beneficiaries, Mr. Simeon Odogbane, who is the Chief Executive, Gbane Business Enterprise, said he was into Communications and Point of Sale (PoS) services.

He said the CBN support would enable him “go on business expansion, as well as expansion of labour force and profit maximisation.”

A graduate of electrical electronics from Ebonyi State, Ukpabi Chukwudi, who is into production of solar powered energy systems admitted that there had been little or no financial support to expand the business prior to the apex bank’s opportunity.

He added that he was cash-strapped to expand services to more clients, as the business was capital intensive.

He said, “But now the CBN loan will help me develop ready-made power systems for customers and expand by scope of operation.”

Chukwudi said amidst the current electricity challenges in the country, solar power systems could “give you the basic electricity need to power your television and the rest especially those in the rural areas.”

He said that he intended not to only produce the systems but also impart the knowledge on other graduates, thereby creating huge employment opportunities.

He added, “So there are some graduates that need the skills. I want to say it’s not only producing it but I want to go into training other graduates and imparting them the skills.”

Nonetheless, CBN Director, Development Finance Department, Mr. Yila Yusuf, encouraged more youths from tertiary institutions to access the TIES portal and complete the application forms if they think they are eligible.

He said the five beneficiaries so far awarded were only part of a subset of applicants whose applications were still being processed.

He said, “We are looking at activities that are job stimulating including agribusiness, creative industry and activities that could contribute to exports among others.”