CBN battles graduate unemployment with entrepreneurial scheme

BY EMEKA EJERE

In a bid to reduce high rate of graduate unemployment in the country, the Central Bank of Nigeria (CBN), is funding a scheme targeted at financing 25,000 graduate entrepreneurs annually, which will in turn create an additional 75,000 sustainable jobs annually across the country.

Coming in form of loans for university and polytechnic graduates who are willing to set up businesses under the Tertiary Institutions Entrepreneurship Scheme (TIES), the arrangement is expected to boost efforts at fighting rising unemployment in the country, the apex bank said.

According to the National Bureau of Statistics (NBS), Nigeria’s unemployment rate rose to 33.3 per cent in the fourth quarter of 2020, translating to some 23.2 million people, the highest in at least 13 years and the second-highest rate in the world.

The figure had jumped from 27.1 per cent recorded in the second quarter amidst Nigeria’s lingering economic crisis made worse by the Coronavirus pandemic. Unemployment rate in the country has more than quadrupled since 2016 when the economy slipped into a recession. A second recession occurred in 2020.

However, KPMG has stated that the Nigerian unemployment rate had increased to 37.7per cent in 2022 and will further rise to 40.6per cent, due to the continuing inflow of job seekers into the job market.

The multinational consulting firm, in a newly released report tagged ‘KPMG Global Economy Outlook report, H1 2023,’ said unemployment will continue to be a challenge due to the slower-than-required economic growth and the inability of the economy to absorb the 4-5 million new entrants into the Nigerian job market every year.

Creating paradigm shift

While launching the scheme in November 2021 in Abuja, the suspended governor of CBN, Mr Godwin Emefiele, also presented loans ranging from N4.1m to N5m to graduates who applied and were selected.

“The scheme, developed in partnership with Nigerian polytechnics and universities, is designed to harness the potentials of graduate entrepreneurs by creating a paradigm shift from the pursuit of white-collar jobs to a culture of entrepreneurship for economic development and job creation,” Emefiele had said.

He noted that it had become imperative that government at all levels put in place policy measures to support entrepreneurial development among youths amid the lack of adequate employment opportunities.

The governor said such measures would create an enabling business ecosystem that supports innovation and enables the youth to unleash their entrepreneurial potential, by redirecting their focus from seeking white-collar jobs to a culture of entrepreneurship development.

“The ecosystem should provide support in re-orientating, training, and providing a financing model apt to the peculiarity of the sector within which the businesses operate,” he added.

Innovative financing

According to the implementation guideline signed by Yusuf Yila Philip, CBN’s Director, Development Finance, the objective of the TIES is to enhance access to finance by undergraduates and graduates of polytechnics and universities in Nigeria with innovative entrepreneurial and technological ideas.

“The CBN, as part of its policy measures to address rising youth unemployment and underemployment, introduces the Tertiary Institutions Entrepreneurship Scheme (TIES) to create a paradigm shift among undergraduates and graduates of Nigerian polytechnics and universities, from seeking white-collar jobs to entrepreneurship,” the apex bank said.

“The scheme aims to provide an innovative financing model that will boost job creation, enhance entrepreneurship development, and support economic growth.”

The guideline further said start-ups and existing businesses in areas such as agribusiness, information technology, creative industry, as well as science and technology are eligible for financing under the scheme.

It further noted that priority would be given to innovative entrepreneurial activities with high potentials for export, job creation and transformational impact.

The scheme is being implemented through three components namely term loan, equity investment and developmental components. Under the term loan component, an individual project can access a maximum loan of N5 million with a five-year tenor and interest rate of five percent per annum (nine percent effective from March 1, 2022, or as may be prescribed by the CBN). For partnership/company projects, the loan is limited to N25 million.

“Applicants under the scheme shall be graduates of Nigerian polytechnics and universities with first-degree certificate (BSc/HND/ or its equivalent); National Youth Service Certificate (NYSC) discharge or exemption certificate; Certificate of Participation issued by polytechnics and universities evidencing entrepreneurship training; and not more than 7 years post-NYSC,” the document reads.

The equity investment component comes in the form of injection of fresh capital for start-ups, expansion of established businesses or reviving of ailing entrepreneurial businesses.

Another component of the intervention is the developmental component which shall be disbursed in the form of grants to Nigerian polytechnics and universities in a national biennial entrepreneurship competition.

The apex bank said it would award N500 million worth of grants to five top Nigerian polytechnics and universities with the best entrepreneurial pitches/ideas. Only undergraduates of Nigerian polytechnics and universities are eligible to participate under the developmental component.

“Five top Nigerian polytechnics and universities with the best entrepreneurial pitches/ideas shall be awarded as follows: first place – N150m; second place – N120m; third place – N100m; fourth place – N80m; and fifth place – N50m,” the document adds.

‘Interested applicants must apply on the dedicated online portal (https://cbnties.com.ng) and provide all the requisite documents to support the application.”

However, an economist and private sector advocate, Dr Muda Yusuf, believes that as much as intervention schemes are good in tackling unemployment, they are not sustainable but only function for as long as there is budget to drive them.

Yusuf, a former Director-General, Lagos Chamber of Commerce and Industry (LCCI), said in a monitored interview that what is sustainable is to create an environment where those who are creating the jobs will be able to sustain their investments and grow their businesses.

He said: “Unemployment is a function of investment. If people are not investing or if people who are already investing are having challenges sustaining their investments, then there is a problem.

“So the only sustainable way to deal with the unemployment problem is to fix the challenges of investors, the challenges of entrepreneurs, especially the micro enterprises, the SMEs and all of them. All over the place, there is a whole lot of challenges that they’re facing.”