ONU OKORIE writes that the youth entrepreneurship program of CBN is a solution to the current employment opportunity gap in the country
Critically looking into the programmes of the present administration on economic development plans there is no doubt that, youth entrepreneurship development program YEDP of the Central Bank of Nigeria, CBN stands out when it come to employment generation.
As part of its efforts to deepen credit delivery to address the challenges of unemployment, promote entrepreneurial spirits among Nigerian youths and enhance the spread of small and medium enterprises CBN established the Youth Entrepreneurship Development Programme.
The programme is aimed at harnessing the latent entrepreneurial spirit of the teeming youths by providing timely and affordable finance to implement their business ideas. This will provide a sustainable mechanism to stimulate employment, contribute to non-oil Gross Domestic Product (GDP) and address the challenge of youth restiveness.
According to the CBN governor, Godwin Emefiele, the objectives of the Programme are to: Harness the entrepreneurial skills and innovative capacities of youths; Improve access to finance for youth entrepreneurs using a well-structured business model; Stimulate flow of finance to startup enterprises; Encourage job creation; Increase the contribution of the non-oil sector to the GDP; and Promote diversification of the economy.
Activities to be covered are startup and expansion projects for young graduates and non-graduates in the following sub-sectors: Agricultural Value Chain (fish farming, poultry, snail farming, etc. Cottage Industry, Mining and Solid minerals,
Creative Industry Tourism, Arts and Crafts, Information and Communications Technology ICT, Any other activity that may be determined by the CBN from time to time are areas covered by the program.
Loan Amount shall be N3 million maximum for a single obligor and N10 million for group projects jointly owned by 3-5 qualified beneficiaries. Interest Rate – lending banks shall access the fund at two percent from the CBN and on-lend at a maximum rate of 9% per annum, all charges inclusive. Funding shall come from the Micro Small and Medium Enterprises Development Fund MSMEDF. NYSC Discharge Certificate shall be the collateral from beneficiaries. Verified certificates of tertiary institutions shall be taken as additional collateral for graduate beneficiaries.
Artisans will use their School Leaving Certificate or Technical Certificate or approved Proficiency Certificate from National Board for Technical Education NBTE. Third party guarantors will also be provided as additional collateral.
Lending bank shall obtain at least one credit report on promoter(s) for all projects. Cost of training for beneficiaries will be shared between the CBN and the lending bank in a ratio of 50:50 or any other agreed ratio. Risk sharing on startups will be at 50:50 between the CBN and the lending bank as an incentive to banks to support startups and youth entrepreneurs. Disbursement shall be in tranches and attached to project/ equipment financing to minimize fund diversion by beneficiaries. All movable collaterals used to secure the loan shall be registered on the National Collateral Registry (NCR) by the lending bank. Within two weeks of repayment of loan, the lending bank shall discharge all registered movable collaterals on the National Collateral Registry and notify the customer accordingly.
Repayments shall be amortized and monthly principal and interest repayments shall be remitted by the lending bank to the CBN. A 50:50 share between members of the National Youth Service Corps (NYSC) and Non-NYSC members (not more than 5 years post-NYSC.
A borrower shall meet the following criteria to be eligible: Be between 18 and 34 years of age. Be a NYSC member or non-NYSC member (but not more than 5 years post-NYSC). Possess a verifiable tertiary institution certificate.
iv. Artisans shall possess School Leaving Certificate or Technical Certificate or approved Proficiency Certificate from NBTE (whichever is applicable). Programme is an equal opportunity intervention in all respects – geo-political zone, gender, (dis)ability, etc. Applicants will be pre-qualified by the lending bank using an on-line portal. Pre-qualified applicants will undergo training before they can access the facility. Training will be handled by the CBN Entrepreneurship Development Centers (EDCs). Pre-qualified applicants will submit their business proposal(s) to the lending bank for appraisal. Successful applicants will submit their loan applications in prescribed format to the lending bank. Lending banks shall receive process, approve and forward requests for the facility from successful applicants to the CBN.
vii. The pre-qualification and appraisal process by the lending bank shall not exceed 15 days from the day of on-line submission of intent by prospective beneficiaries. Each request must be accompanied with the following documents: Business plan which should state expressly, the financing plan, economic benefits, etc
The CBN reserves the right to reject an application from any lending bank that does not meet the requirements of the Guidelines. Projects shall be monitored by the Monitoring Team comprising of the CBN, NYSC and the lending bank. The Development Finance Department of the Central Bank of Nigeria shall be responsible for the management of the Programme. For effective implementation of the programme, the responsibilities of the stakeholders shall include:
The CBN is expected to Articulate clear Guidelines for the implementation of the programme. Determine the limits in accordance with the provisions of the MSMEDF Guidelines. Provide logistic support for the training of pre-qualified applicants in collaboration with other stakeholders. Approve and disburse loan requests from lending banks in favour of successful beneficiaries. Carry out verification and monitoring of projects financed. Conduct impact evaluation in conjunction with the Monitoring Team and other relevant stakeholders. Generate periodic reports on its performance. Sensitize stakeholders and the public on the activities of the Scheme. Facilitate review meeting of Stakeholders. Review the Guidelines as may be necessary from time to time.
Part of duties of participating Financial Institutions PFIs include: develop a portal to facilitate on-line registration by prospective applicants for pre-qualification. Facilitate a link between the portal and the website of the NYSC for authentication of the details of NYSC members. Pre-qualify, appraise and screen business proposals of applicants as part of their due diligence. Forward such approved requests to CBN for verification and approval. Carry out all relevant due diligence in the administration of the facility. Obtain at least one credit report on promoter(s) for all projects. Verify all certificates used as collateral for the facility. Cost of training for pre-qualified applicants will be shared between the CBN and the lending bank at 50:50 or any other agreed ratio. Grant credit ONLY to activities covered under these Guidelines at a maximum interest rate of nine percent per annum all charges inclusive. Register all movable assets accepted or financed as collaterals for the loan with the National Collateral Registry (NCR). Monitor the projects during the loan period. Render periodic returns as may be specified by the CBN from time to time. Shall within 2 weeks of repayment, discharge all movable collaterals used to securitize the loan on the National Collateral Registry and notify the customer accordingly. Comply with the Guidelines of the Programme.
On the part of the NYSC it is expected to: Authenticate the details of corps members using its on-line link with the lending bank. Provide lien on the discharge certificates of corps members who will benefit from the programme. Provide logistic support, that is, venue and accommodation for the training of applicants. However the borrower he is expected to register for pre-qualification with the lending bank using the on-line portal for the Programme. Submit business proposal and other documentation requirements. Adhere strictly to the terms and conditions of the Facility. Utilize the funds for the purpose for which it was granted. Make the project and records available for inspection/ verification and monitoring by the CBN and Monitoring Team. Comply with the Guidelines. Cover their transportation cost for the training programme. Discontinuation of a Credit Facility: Whenever a loan is repaid or the facility is otherwise discontinued, the lending bank shall return the fund to the CBN. The lending bank shall discharge the movable collaterals from the National Collateral Registry.