Friday, 8 April 2016

Re: N10 Billion Bank of Industry Loan

By Dr. Ahmed Adamu

One of the recent demonstration of commitment by this administration toward youth empowerment is the launch of the N10 Billion loan to youths by the Bank of Industry (BOI), which will help create 36, 000 jobs. If implemented, this will add count to the targeted 3.5 million jobs that the government set to create in three years. In order to make these loans more effective, there are some issues to consider, which might affect the overall objective of the programme.

First, the N10 billion loan is only accessible to the graduates who finished at least a National Diploma, this means that only a small fraction of population of the young people can access this loan. Most of the Nigerian empowerment programmes capitalized on the tertiary institutions graduate, leaving out the non-schooled or non-graduate youth. The non-schooled and non-graduate youth have higher propensity of being unemployed and they pose more risk to the society as many of them tend to be uninformed and hopeless, as such these kinds of opportunities should be open to them. Priorities have to be given to these categories of the youth. Even though, the graduates equally need jobs as 8 million graduates enter labour market annually, and only 23% of new jobs are perceivably suitable for them. So, there should not be marginalisation of any section of youths for this programme.

In previous year, around 1.1 million all kind jobs were created and 72% of these jobs came from informal sector, individual businesses with little or no structure and capacity. And this sector employ more of the non-schooled and non-graduate youth. So, there is need for professionalization and investment in small skilled businesses so that it can provide more decent and organised job opportunities like in the organised private sector.

The second issue with the BOI loan is it being a loan. While some argue that, it will allow for only the serious minded young people to access the loan, because if it is free, anyone can apply. That is correct, but the BOI or the government may consider giving a targeted grant, because payment of interest and loans cripple small or infant businesses. The BOI belonging to the government may not all the time maximise profit. Alternatively, the bank might consider scrapping the interest payment, even though it is little, but there are some social and economic issues relating to the interest payment. First, the payment of interest add to the cost of capital, and some faith persuasions distaste anything to do with interest, and that may discourage or deny others access to the loans. This is in addition to other requirements like the need for two external grantors, which makes the access to the loan very difficult, as some people may be reluctant to stand as grantors.

The third issue is that the application is online, and this means that rural poor youth, who are not familiar with computer operation, who cannot write good English and who cannot access internet cannot be able to access the loan or compete. So, the programme shall be opened to the rural poor and there shall be special support for them in the application process.
The fourth issue has to do with the distribution of the loans. Empowerment programmes must be targeted, there is need for a prior indices or surveys that states the context of the unemployed youth in terms of their real economic conditions, their chosen business, and capital scale. The funds shall then be distributed based on this independent survey. But, since this is a loan, and not everyone will want to take a loan, then, during the survey the participants may be asked about their willingness to take the loan.
Lack of this targeted approach brings about the possibility of misplacement. Since the application is online and it is based on how competitive each entry is, there is tendency that those that may not necessary need the loan will eventually benefit from it, and those that seriously need it, may not compete favourably. Therefore, the targeting approach should be employed so that the weak and poor can be directly identified and can then access the loan according their productive need and poverty status.  
One of the strengths of this programme is the offline business training sessions for the youth applicants, which is very important, and it should be maintained. More targeted empowerment grants should be created.
For those that want to apply for the Youth Entrepreneurship Support Programme shall read the flier below:


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