Bulk of young Nigerians eligible to apply for a loan from a N75-billion Nigeria Youth Investment Fund (NYIF) are stuck on the waiting list in what may scupper the government’s efforts to create badly needed jobs in Africa’s most populous nation.
Since it was set up in October 2020, only 395 youth had benefited from the Fund, which aims to financially empower Nigerian youth to generate at least 500,000 jobs between 2020 and 2023, as at January, according to the government.
In that time, 3 million youths applied for a loan which means only one in every 7,594 youths that applied for the loan was successful.
The number of youths that have applied till January implies that an average of 750,000 people apply every month, which means the number of applicants may have jumped to 4.5 million as at March. If the trend in disbursements is sustained, then only a fraction would have successfully applied.
While the list of beneficiaries has not been published, BusinessDay spoke with one of the applicants, who was frustrated over the delay in accessing the facility.
Amaefule Chinonmso, who is based in Port Harcourt, said he applied for the fund around October or November 2020.
Last month, he got a text message saying he was pre-qualified for the loan but had got no further feedback since then.
Data from the National Bureau of Statistics (NBS) show that Nigeria’s unemployment rate as at the second quarter of 2020 stood at 27.1 percent with the youth population accounting for about 64 percent of total unemployed Nigerians.
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Channel for disbursement
Out of the over 800 microfinance banks in Nigeria, NIRSAL Microfinance Bank (NMFB) was chosen as the sole eligible participating financial institution for the disbursement of the Fund.
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’ Programme, and NIRSAL Microfinance Bank Access Target Account, among others.
Who should access the youth fund?
According to the regulatory framework, eligibility criteria for accessing the Fund include, youth within the age bracket of 18-35 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 possesses 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, there is a need for the provision of a business plan summary or completed questionnaires as well as an Entrepreneurship Training Certification from the 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 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 business, you can access up to N250,000, while as a registered business (Business Name / Limited Liability / Cooperative Societies/ Commodities Associations) you can have access up to N3,000,000. The 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 NYIF
First step requires applicants to attend compulsory entrepreneurship training with an approved Federal Ministry of Youth and Sports Development (FMYSD) EDIs. The second step takes successfully trained prospective applicants 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 guidelines, makes appropriate decisions 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 a one-year moratorium.
Extension of moratorium
Last week, the CBN extended the discounted interest rate for its intervention facilities by another 12 months to February 28, 2022, which is seen as a big boost for an economy 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 a year period.
The reduction was part of measures to mitigate the negative impact of the COVID-19 pandemic on the Nigerian economy.
Directors of the International Monetary Fund (IMF) had emphasised the need for urgent policy adjustment and more fundamental reforms to sustain macroeconomic stability and lift growth and employment in Africa’s largest economy.
