Latest data from the National Bureau of Statistics (NBS) in the second quarter of 2020 showed that 21.76m Nigerians are unemployed. Out of this data, the NBS said over 13.9 million youths are currently unemployed, representing the highest segment without jobs. Perhaps, it was based on the huge employment gap that the federal government, through the Ministry of Youths and Sports Development conceived the N75bn Nigeria Youth Investment Fund (N-YIF). The fund which targets youths between ages 18-35 is aimed at generating at least 500,000 new jobs. In this report, our Correspondent examines how optiomistic the youths are about the scheme, how to access it, and the potential impact.
Some youths are in high spirit over the federal government’s recently launched Nigeria Youth Investment Fund (N-YIF).
The fund targeted at empowering youths is aimed at creating about 500,000 new jobs in three years.
Recall the Federal Executive Council (FEC) on the 22nd of July, 2020 approved the N75bn as soft loans for the youths from 2020 to 2023.
The Nigeria Youth Investment Fund (N-YIF) is an initiative of the Federal Ministry of Youth and Sports Development but is being implemented by the Central Bank of Nigeria (CBN) through the NIRSAL Microfinance bank.
CBN has released the framework on how beneficiaries can access the loan. The implementing bank, the NIRSAL Micro Finance Bank (NMFB) has also opened a portal on its website for interested applicants to apply. Beneficiaries stand to get up to N3m single-digit interest loan with a one-year moratorium to boot.
But the NIRSAL MFB window shall be funded with an initial take-off seed capital of N12.5 billion.
The N-YIF is dedicated to investing in the innovative ideas, skills, and talents of Nigerian youth, and to institutionally provide the youth with a special window for accessing much needed funds, finances, business management skills, and other inputs critical for sustainable enterprise development.
Some of the prospective beneficiaries have expressed excitement over the opportunity and are swarming the NIRSAL MFB to apply.
Scholastica T. Akaabiam, who said she has applied for the loan, expressed excitement and confidence the loan would improve her business.
She said she is into organic soap, disinfectants, and bleach making adding that the loan will enable her to upscale her business and get the needed machinery.
She also expressed confidence the disbursement process would be transparent without favouritism but based on business integrity.
“With the CBN involved, I have no doubt the process would be transparent devoid of nepotism and corruption. I have no doubt about that. I hope I am not disappointed,” she added.
An aspiring entrepreneur, Mr. Dare Joseph said he hopes to get the loan to start a business. He lauded the initiative and also said the training aspect of the loan condition is also great as this would enable beneficiaries to deploy the loans in productive ventures.
“I’m excited about the opportunity. I will apply for it. I will also participate in the training so that I can learn more on how to profitably run my business” he said.
Aminat Hussein, a young unemployed graduate said she will leverage the loan to start a fashion business.
“I will definitely apply. I know loans like this can be difficult to get because of the thousands of people that will apply but I will give it a trial. If I am lucky, I will get,” she said.
She also called on the authorities to be transparent about the process and not allow privileged people in the government and the society to highjack the loans for their wards and family members.
The CBN framework
Registered and unregistered businesses can apply. The unregistered enterprises will get a maximum of N250,000 loan at a 5 per cent digit interest rate while registered businesses can get up to N3 million loan on a single-digit interest rate of 5 per cent per annum.
Based in the framework, an eligible youth must also fulfill the following conditions: Have 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. These will suffice for a formal Business Enterprises (Youth Owned Enterprises).
For enterprises that are legal entities duly registered with the Corporate Affairs Commission (CAC), these documents are required: Evidence of registration with Corporate Affairs Commission (Certificate of Incorporation and Form CAC 2A); Business questionnaire; List of Directors with BVN number, evidence of regulatory approvals (where applicable); Tax Identification Number (TIN).
Cooperative societies duly registered with the relevant government authorities and members of Commodity Associations that fall within the eligible age, bracket are also eligible to participate.
There are those not qualified to apply for this initiative. They include; 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. Also, beneficiaries of other government loan schemes that remain unpaid are also not eligible to participate.
The framework also prescribed that beneficiaries must have some sort of training so they could properly use the loan.
Applicants shall undergo a compulsory entrepreneurship training arranged or approved by the Federal Ministry of Youth and Sports Development.
The following businesses activities are eligible to participate based on the framework. Thus, legally allowed activities in the sectors or focal areas listed shall be eligible: Technology/ Innovation; Agriculture and related value chain; Green Economy and Renewable energy sector; Manufacturing, Hospitality/Tourism; Construction; Logistics and supply chain; Healthcare value chain, Creative sector and Trading and Services. Others as may be determined by NYIF/CBN from time to time.
However, preference shall be given to enterprises that will support the growth of priority sectors, specifically those identified by the Economic and Recovery Growth Plan ERGP and the Nigerian Youth Employment Action Plan.
The Tenor of the loan shall be maximum of 5 years depending on the nature of the business and the assets.
The framework also specified that the Term Loan (for asset acquisition/improvement) for an individual (unregistered business) shall be determined based on activity/nature of project subject to the maximum of N250, 000. For a registered businesses (Business name, Limited Liability, Cooperative, Commodity Association shall be determined by the activity/nature of project subject to the maximum of N3 million (including working capital).
The framework also requires that all immovable assets acquired with the loan must be registered with the National Collateral Registry (NCR).
The tenor of the loan is a maximum of five years depending on the nature of the business and the assets acquired with a moratorium of up to 1 year maybe allowed depending on the nature of the business and the assets acquired.
The interest rate under the intervention shall be at not more than 5% per annum (all-inclusive).
The MYSD will collaborate with relevant stakeholders to identify potential training for training/mentoring.
The youths that are duly screened (and undergo the mandatory training where applicable) shall be advised to log on to the portal provided by the NMFB to apply for the facility.
Upon satisfactory appraisal of application, NMFB shall apply for the release of funds in respect of approved individuals/enterprises from the NYIF and CBN.
The CNN said NMFB shall conduct credit checks on applicants and those with unsatisfactory credit reports will be rejected.
On the collateral requirement, the framework said the NMFB will leverage on the General Standing Instruction (GSI) as collateral.
Also corporate guarantees will be acceptable where applicable.
On the Principal Repayment, repayment shall be made on an installment basis by the beneficiaries to the NMFB according to the nature of enterprise and the repayment schedule/work plan provided and agreed at the application processing stage.
To ensure equitable participation and even access to finance by the youth across the country, applications will be batched according to State and Local Government Areas (LGA) of applicants. The bank promotes gender parity; therefore the female entrepreneurs are encouraged to apply.
Experts react
An economist at the University of Nigeria, Nsukka, Enugu State Mr. David Akwu said the gesture by the federal government is a welcome development but should be implemented transparently.
“I think the intention is good but the major concern is the transparency in the implementation. It is always a major problem with schemes like this. So following from the concerns of the youths during the #EndSARS protests, it is an opportunity for the federal government to transparently disburse the loans so the youths can begin to have confidence in our government” he said.
Dr. Iorwuese Tyopev, a Makurdi based a development economist and an analyst at Falvey Consulting said: the scheme is good and will impact the youth positively.
“For me, being a private sector person who interacts with a lot of small and medium scale businesses, a see the seed capital creating new businesses” Tyopev said.
Tyopev said that the CBN has a track record of effectively disbursing intervention loans through participating financial institutions. Thus, he expressed confidence the youth fund will be effectively disbursed.
“A lot of my clients have accessed the AGMEIS loans, they have used it to set up businesses and have employed some labour. Even the Agro Geo-Cooperatives that NIRSAL has brought will impact employment creation and ultimately the economy because they are targeting youths for farming. So all of these stimulus packages will impact employments” he said.
