In its five year policy thrust, the Central Bank of Nigeria (CBN) stressed the need to extend its intervention support to youth population who possess entrepreneurship skills in the creative industry.
The CBN has been intervening in critical sectors of the economy to spur growth and create jobs for Nigerians, especially the teeming youth.
“Additional emphasis will be placed on supporting greater growth of our economy and in reducing unemployment, through targeted interventions in the agricultural and manufacturing sectors,” Godwin Emefiele, governor of the CBN.
Data from the National Bureau of Statistics (NBS) showed that national unemployment rate rose to 2020 to 33.3 percent in the fourth (Q4), 2020 from 27.1 percent in the second quarter (Q2) of the same year. The underemployment rate decreased from 28.6 percent to 22.8 percent. A combination of both the unemployment and underemployment rate for the year under review gave a figure of 56.1 percent.
The NBS data further revealed that youth population eligible to work was about 40 million, out of which only 14.7 million were fully employed, while the remaining 11.2 million were unemployed.
Youth Entrepreneurship Development Programme (YEDP)
As part of effort towards addressing the challenge of youth unemployment in the country, the Apex bank on March 15, 2016, launched the Youth Entrepreneurship Development Programme (YEDP).
This was to enhance the deployment of the ingenuity and resourcefulness of Nigerian youths for maximum economic development.
The YEDP aims to fix the triplebarreled 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 3 – 5 youths, Interest rate is 9 percent per annum. Tenor broadly depends on project complexity and cash flow but is between 1 year for working capital loan and 3 years for term loan. The collateral requirements are quite simple: academic and NYSC certificates, third party guarantees and other movable assets.
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 utilize the YEDP facility properly.
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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.
Nigerian Youth Investment Fund (NYIF)
The Federal Executive Council on the 22nd of July, 2020 approved the sum of N75 billion for the establishment of the Nigeria Youth Investment Fund for the period of 2020 – 2023 dedicated to investing in the innovative ideas, skills and talents of Nigerian Youth, and to institutionally provide youth with a special window for accessing much needed funds, finances, business management skills and other inputs critical for sustainable enterprise development.
The Nigerian Youth Employment Action Plan was developed by the Federal Ministry of Youth and Sports Development (FMYSD) as a built-in strategy to respond effectively to the youth employment challenge in Nigeria.
The major objectives of the plan are to address fragmentation of youth initiatives that prevent assessment of impact, and to provide Nigeria youth with investment inputs required to build successful businesses that can become sustainable employers of labour and contributors to Nigeria’s development.
Furthermore, the plan targets young people between the ages of 18-35 years and details the needed actions required to support business establishment, expansion and consequent employment creation for youth in critical economic and social sectors.
Olalekan Aworinde, Senior Lecturer, department of economics, Pan-atlantic University, Lagos, sees the NYIF as a good programme only if it is well implemented.
He explained that the fund is dedicated to investing in the innovative ideas, skills and talents of Nigerian youths aimed at turning them into entrepreneurs, wealth creators and employers of labour, contributing to national development. “Looking at the objectives of this fund, if well implemented will achieve the targeted goals”.
He said the CBN can ensure that the set targets are achieved and funds accessed by the target group if there is sincerity on the part of the government.
In addition, the program must be devoid of corruption, embezzlement as well as high handedness of the officials involved, he said.
“The program can also achieve the goals if the issues of “man -know- man” is removed from the equation,” he said.
Under the Creative Industry Financing Initiatives mainly targeted at youths, the CBN has disbursed N3.19 billion to 341 beneficiaries, of which 53 percent is to the movie industry.
Channel for disbursement of the fund
Out of the over 800 Microfinance banks in the country, NIRSAL Microfinance Bank (MFB) was chosen as the sole eligible participating financial institution for the disbursement of the fund.
NIRSAL, otherwise known as NMFB is a subsidiary of the Nigeria Incentive-based Risk Sharing System for Agricultural Lending (NIRSAL Plc.), a non-banking financial institution established in 2013 by the CBN with a mandate to facilitate the free flow of affordable finance and investments to the agricultural sector.
Other loans offered by NIRSAL include The Agric, Small Medium Enterprise Scheme (AGSMEIS), Anchor Borrowers’ Program, and NIRSAL Microfinance Bank Access Target Account among others.
Who should access the youth investment fund?
According to the regulatory framework, eligibility criteria for accessing the fund include a youth that is within the age bracket of 1835 years, a youth that has business/ enterprises domiciled and operational in Nigeria, has not been convicted of any financial crime in the last 10 years, has a valid Bank Verification Number (BVN), and possess Local Government Indigene Certificate.
The framework stated that applicants currently enjoying NMFB 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.
Beneficiaries of other government loan schemes that remain unpaid are also not eligible to participate.
A huge percentage of youth are engaged in the informal sector. Accordingly, the NYIF will facilitate the transition of informal enterprises owned by youth into the formal mainstream economy where they can be supported comprehensively, build a bankable track record; and be accurately captured as active participants in economic development.
In addition, the guidelines stated that there is need for provision of business plan summary or completed questionnaire as well as Entrepreneurship Training Certification from Federal Ministry of Youth and Sports Development (FMYSD) Entrepreneurship Development Institutes (EDIS).
For registered businesses, these are the requirements: Formal business enterprises (Youth owned enterprises), duly registered with the Corporate Affairs Commission (CAC), Business plan Summary or Completed Questionnaire, Valid Bank Verification Number (BVNS) of Directors, Provision of Tax Identification Number (TIN), and Entrepreneurship Training Certification from FMYSD EDIS.
Amount you can access/ collateral
As an individual or non-registered businesses you can an access up to N250,000.00, while as a registered businesses (Business Name / Limited Liability / Cooperative Societies/ Commodities Associations) you can have access up to N3,000,000.00. Interest rate under the intervention is 5 percent per annum (all inclusive).
In terms of collateral, there is no collateral required but all assets purchased under the scheme must be registered with the National Collateral Registry (NCR. Also, the Global Standing Instruction (GSI) mandate will be activated to ensure full repayment by loan obligor.
How to access the NYIF
First step requires applicants to attend a compulsory entrepreneurship training with an approved Federal Ministry of Youth & Sports Development (FMYSD) EDIS. Second step takes successfully trained prospective applicants proceed to NIRSAL Microfinance Bank (NMFB) portal to apply for the loan.
The third step requires eligible applicants to submit applications successfully on NMFB’S portal. Then, NMFB conducts loan assessment in line with Risk Assessment Criteria and programme guideline, make appropriate decision and forward recommended applications to CBN for final approval.
Finally, the CBN reviews applications and gives final approval for disbursement to NMFB. The NYIF has a maximum tenor of not more than 5 years with one-year moratorium.
Extension of moratorium
On March 2021, the CBN extended the discounted interest rate for its intervention facilities by another 12 months to February 28, 2020, which is seen as big boost for an economy that is licking its wounds from recession.
On March 1, 2020, the CBN reduced the interest rates on its intervention funds from 9 percent to 5 percent per annum for one year period.
The reduction was part of measures to mitigate the negative impact of Covid-19 pandemic on the Nigerian economy.
Directors of the International Monetary Fund (IMF) had emphasized the need for urgent policy adjustment and more fundamental reforms to sustain macroeconomic stability and lift growth and employment in Africa’s largest economy.
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