Unveiling innovative financing intervention for a jobless generation

EVERY year, batches of graduates are churned out from states after observing the mandatory National Youth Service Corps (NYSC) programme. Indeed, job creation in Nigeria has simply not kept pace with the growth in the nation’s working age population. Of the over 250,000 graduates of Nigerian tertiary educational institutions that enroll in the NYSC scheme each year, more than 41 per cent of them are without employment after the mandatory NYSC programme. FEMI ADEKOYA examines how the N2billion Graduate Entrepreneurship Fund (GEF) from the Bank of Industry (BoI) may assist teeming unemployed youths emerge from the vicious cycle of unemployment.

FOR Simon Ocheni and Emeka Stanley, promoters of Cassoflakes and ZoboCola, life after the mandatory NYSC programme remains a test of their entrepreneurial skills following the realization that the sought after jobs are not available.

With the need to survive, their capacities to become productive and innovative were put to test as their products have today; become a source of livelihood for them and others who are now directly and indirectly employed in their value-chain.

These examples reinforce the position of the African Centre for Economic Transformation, Africa’s leading think tank that the continent has to create a million new jobs yearly to keep up with the demand for employment. The only way this can be done, it says, is through an explosion of entrepreneurship that will feed into industrialisation and export competitiveness and help the economic transformation of the continent.

For Nigeria, whose population growth remains the highest in the continent, the focus on entrepreneurship has become more urgent because within two decades or so, based on projections, Nigeria and other African countries will have the largest proportion of young working-age population in the world.

This factor alone could propel Africa into a new era of accelerated growth similar to that of Asia; however, if there are no worthwhile employment opportunities, the continent could descend into the sort of chaos and insecurity that is currently engulfing several countries.

It is also clear that, as more people move into the cities, the old pattern of seeking jobs in government, the public services or with large organisations will no longer suffice. The onus has now passed to entrepreneurs, new and established; to create new businesses not only to employ themselves but also provide work for others.

The example from other countries shows that entrepreneurship generates a continuous stream of wealth and jobs. One original idea leads to a whole network of other viable ideas; one successful new company spawns scores of others and this continues in a virtuous cycle.

Entrpreneurship also becomes a crucible for new skills, for the application of new knowledge, for cutting edge innovations, for new ways of looking at things. Essentially, it becomes a new paradigm shift and new life for the country.

In a bid to bridge the widening gap in unemployment ratio, especially among youths, the Bank of Industry (BoI), unveiled a N2 billion Graduate Entrepreneurship Fund (GEF) for youths undergoing the mandatory National Youths Service Corps (NYSC) programme.

According to the bank, the Fund provides a platform for NYSC members interested in entrepreneurship to be trained and granted access to finance for actualising their viable business ideas.

To achieve its objectives, the bank has equally sealed a pact with the NYSC Directorate through the NYSC Skills Acquisition and Entrepreneurship Development (SAED) initiative and nine other partner Entrepreneurship Development Centres/training consultants selected by the BoI.

Speaking at the unveiling of the Fund in Lagos, the Managing Director, BoI, Rasheed Olaoluwa, explained that the Fund is designed to encourage graduates of tertiary institutions that are serving under the one-year NYSC programme, to venture into business and become employers of labour rather than job-seekers, while developing the next generation of Nigeria’s business leaders.

He said: “An innovative approach is required to tackle this social malaise of graduate unemployment that has engulfed the country. The strategy is to identify the innate talents of these young graduates as soon as they leave school, build their capacities for self-reliance; and also empower them to establish their own businesses, thereby creating jobs not just for themselves, but also for other youths that they may employ.

“Of the over 250,000 graduates of Nigerian tertiary educational institutions that enrol in the NYSC Scheme each year, more than 41 per cent of Nigerian graduates are without employment after the mandatory NYSC programme. Job creation in Nigeria has simply not kept pace with the growth in our working age population.”

To address these challenges, he noted that N2 billion has been provided by the bank to finance businesses under the Fund, with each beneficiary of GEF accessing a minimum loan of N500, 000 and a maximum of N2.0 million for the procurement of machinery and equipment as well as for working capital, at a single digit interest rate of 9%, with a loan tenor of 3 to 5 years inclusive of six months moratorium.

“One unique feature of GEF is that it does not require the conventional collateral usually demanded by banks. The collateral requirements for the loan include specific charge over the equipment procured with the loan; Lien on the NYSC discharge certificate. NYSC Directorate will undertake not to release the service discharge certificate until after the loan is liquidated; and one guarantor of the borrower”, he added.

Under the initiative, Olaoluwa noted that 1000 NYSC members will be selected to participate in the capacity building process through an online business idea competition, while medium to long-term loans at single digit interest rates will be provided by BoI for qualifying/successful NYSC members that have bankable business plans after a three-day capacity programme.

The Director-General of the NYSC, Brigadier-General Johnson Bamidele Olawumi commended the bank for the initiative, while advocating a conducive business environment for start-ups to thrive.

According to him, many startups in the country record a high mortality ratio not because of inability to access capital but as a result of the regulatory environment and unstable government policies.