If well-implemented and devoid of political manipulation, the Nigeria Youth Investment Fund (N-YIF) should boost job creation and produce a ripple effect that will culminate in the economic well-being of Nigerian youths, writes James Emejo
It is said that an idle mind is the devil’s workshop. This is particularly true considering the growing population of unemployed youths and the associated increase in social unrests and criminality currently witnessed across Nigeria.
In August, the National Bureau of Statistics (NBS) stated that the number of unemployed Nigerians rose to 21.77 million in the second quarter of the year (Q2 2020) compared to 20.93 million in Q3 2018.
Consequently, this raised the country’s unemployment rate to 27.1 per cent in the review period compared to 23.1 per cent recorded in Q3 2018.
According to the Labour Force Statistics: Abridged Labour Force Survey Under COVID-19 report, the working age population is estimated at 112.39 million with an active labour force of 80.29 million while 32.10 million people are not currently in the labour force.
The statistical agency further pointed out that unemployment rate among young people (15-34 years) was 34.9 per cent, up from 29.7 per cent, while the rate of underemployment for the same age group rose to 28.2 per cent from 25.7 per cent in Q3, 2018.
No doubt, years of failure to diversify the economy from oil, corruption and policy somersaults by past administrations including questionable academic curriculum among others- had all played a role in the dismal unemployment statistics on the country.
Yet, young Nigerians with entrepreneurial ideas and concepts that could generate jobs are often left stranded because of lack of access to credit facilities-mainly for lack of immovable collateral and other requirements.
Even where credit is made available, the cost of funds and lack of infrastructure remained inhibiting variables for the growth of young entrepreneurs.
However, in a bid to reverse the trend and boost employment generation for Nigerian youths with business ideas, as well as redirect their energy into positive development objectives, the federal government through a collaborative initiative by the Central Bank of Nigeria (CBN) and the Federal Ministry of Youth and Sports Development (FMYSD), developed the Nigerian Youth Employment Action Plan as a built-in strategy to respond effectively to the youth employment challenge in the country.
The major objectives of the plan are to address fragmentation of youth initiatives that prevent assessment of impact and to provide the youth with investment inputs required to build successful businesses that can become sustainable employers of labour and contributors to national development.
The initiative 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.
Also, to realise its objectives, the Federal Executive Council (FEC) had on July 22, 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 youths, 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.
Only last month, the apex bank released the implementation guidelines for N-YIF, with a takeoff seed capital of N12.5 billion and appointed the NIRSAL Microfinance Bank (NMFB) as the eligible participating financial institution for the scheme.
The CBN explained that the aim of the intervention was to financially empower Nigerian youths to generate at least 500,000 jobs between 2020 and 2023- and will seek to improve access to finance for youth and youth-owned enterprises for national development; generate much-needed employment opportunities to curb youth restiveness and boost the managerial capacity of the youth and develop their potentials to become the future large corporate organisations.
The guidelines contained in the “Framework for the Operation of the NIRSAL Microfinance Bank Window of the Nigeria Youth Investment Fund (N-YIF)” explained that individual (unregistered business) shall be determined based on activity/nature of project subject to the maximum of N250,000 credit.
On the other hand, registered businesses (Business name, Limited Liability, Cooperative, Commodity Association shall be determined by activity/nature of project subject to the maximum of N3.0 million (including working capital).
The apex bank, however, added that immovable assets acquired with the loan must be registered with the National Collateral Registry (NCR).
Essentially, tenor for loans shall be maximum of five years depending on the nature of the business and the assets acquired adding that moratorium of up to one year may be allowed depending on the nature of the business and the assets acquired while interest rate under the intervention shall be at not more than 5 per cent per annum (all inclusive).
In a bid to further aid the recovery of the credit facilities, the apex financial regulatory body also said the NMFB will leverage on the General Standing Instruction (GSI) as collateral while corporate guarantees will be acceptable where applicable.
The framework pointed out that upon satisfactory appraisal of application, NMFB shall apply for release of funds in respect of approved individuals/enterprises from the NYIF and CBN, adding that NMFB shall conduct credit checks on applicants and those with unsatisfactory credit reports will be rejected.
However, while analysts commended the initiative to unlock the potentials of youths, they cautioned that the lofty objectives of the programme could be compromised if allowed to be hijacked by politicians to satisfy their selfish interests.
Analysts who spoke to THISDAY in separate interviews, further warned that unless effective recovery mechanisms are fully implemented, default on loan repayment plan could increased the level of non performing loans in the banking industry.
Managing Director/Chief Executive, Credent Investment Managers Limited, Mr. Ibrahim Shelling, described the initiative as a welcome idea.
He said:”At least it will provide some access to cheap finance for youths, whom were probably unable to get funding from banks and other institutions to fund their business ideas. Hopefully, it will lead to a number of small businesses springing up to help spur growth in the country.
“However, like with other intervention funds, those that critically need the funds will most likely not be able to access it for a number of reasons i.e. lack of knowledge of the opportunity, lack of confidence to apply, inability to meet conditions etc.
“Also, there is a likelihood that there will be high non-performing loans (NPLs) in the future as a result of huge number of defaulters.
“Even though the funds are supposed to be to start businesses, a number of youths may likely consume these funds to meet lifestyle expenses.”
On his part, former Director General, Abuja Chamber of Commerce and Industry (ACCI), Dr. Chijioke Ekechukwu, while hailing the intervention, called for safeguards to limit abuse, particularly by politicians in the administration of credit to beneficiary.
He said:”The N75 billion Youth Investment Fund is a welcome development for the Youth of of our country.
“The question is, what age bracket do we call youth?
How do you determine the age of a business owner when he can swear an affidavit with less than N1,000 and reduce or increase his age for the purpose of accessing the loan?
“Are there target sectors targeted for the loan or is it for all comers? How do you forestall the hijack of this facility by top government officials and members of the National Assembly? How will the funds be allocated to ensure geographical spread of the country benefit from it?”
“These are relevant questions that need answers before we can ascertain how successful and impactful it will be to our youth and economy,” he added.
Analysts also believed the scheme has the potential to stem the increasing rate of social unrest and other forms of despicable activities perpetrated by jobless youths going forward.