Addressing High Youth Unemployment Rate, The CBN Approach

According to the reports by the National Bureau of Statistics (NBS), Nigeria’s youth population eligible to work is about 40 million.

Out of this, only 14.7 million are fully employed while the other 11.2 million are unemployed. This has been a concern for authorities as there have been various suggestions on what needs to be done to reverse this trend.

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In a recent interview, President of the Trade Union Congress (TUC), Quadri Olaleye, said: “Government must, as a matter of urgency, fix the refineries, stop individuals from mining our mineral resources, encourage local content, discourage influx of expatriates, stop smuggling, build recycling plants, infrastructure, fix power, sign MOU with automobile companies to assemble their vehicles in Nigeria.

“To be frank, the revival of five critical sectors of the nation’s economy is enough to reduce the unemployment rate drastically. The aspect of interest rate should also be looked into.

“Government must deliberately and sincerely martial out plans cum palliatives to encourage the informal sector of the economy. Similarly, I want to appeal to wealthy Nigerians to invest here in the country,” he explained.

The situation has also fostered debate on the role of the monetary authorities in curbing the unemployment rate.

Analysts have said, Monetary policy has a dual mandate of guaranteeing high employment rate and price stability. At one time or another, economic agents around the globe have also tried to use monetary policy to achieve almost every conceivable economic objective with economic growth and low level unemployment often high in the list.

The proponents of this argument are of the view that when the Central Bank of Nigeria (CBN) embarks on an expansionary monetary policy, it does so to stimulate domestic economy and reduce the unemployment rate, while contractionary policy involves raising interest rates to combat inflation.

But the CBN has not minced words in the strategies it is using to battle the high unemployment rate. According to the CBN Governor, Godwin Emefiele, recently in addressing the concerns of unemployment said: “Some Nigerians have argued that the CBN policies are targeted against the youth. Let me say that we are doing everything possible to put in place policies that will benefit all Nigerians.

“CBN is very conscious of the fact that our youth population of between 18 to about 40, 45 constitute close to 60 percent of our population. We are doing everything possible to ensure that we take them into account in all our policy decisions.

“The level of unemployment is regrettable. But I am saying everything is being done to redress that situation. I will give an example. I read how much we have granted in loans under our creative industry financial initiative, which is primarily for the youth. Almost close to about N3.5 billion has been disbursed,

“Our AGSMEIS fund is substantially being disbursed to people in this age. Almost close to about N150 billion has been disbursed to nothing less than 60% of the people in this bracket.

CBN youth, job creation schemes

In chronicling the actions of CBN to tame unemployement, we bring to fore the revelations of the then Director, Banking Supervision Department, CBN, Mr. Ahmed Abdullahi, Giving details about the initiative at a press briefing after the 342nd meeting of the Bankers’ Committee in February 2019, disclosed that one of such interventions is in the creative industry.

He had said the decision to support the creative industry was born out of the Committee’s conviction that the sector holds the key to job creation, poverty reduction and inclusive growth.

Also speaking at the briefing, the Managing Director of Access Bank, Herbert Wigwe, said: “The Bankers’ Committee, after a lot of research identified the creative and IT sector as a critical sector to support social and inclusive growth in Nigeria. We’ve basically found out that the sector would generate a significant amount of employment given how Nigerians inclined in the creative sector have done well in music and others.”

According to the CBN, the initiative, which was aimed at enabling businesses to obtain loans up to the tune of N500 million, has four different pillars that cut across different fields- fashion, information technology, movies, and music. Eligible businesses in these fields, the CBN said, could access loans under the scheme at a maximum interest rate of nine per cent per annum (all charges inclusive).

The regulator also revealed that the scheme would be funded from the AGSMEIS, also an initiative of the Bankers’ Committee.

Reconstruction of National Theatre

Significantly, in order to attain the objectives of the initiative, the CBN and the Bankers’ Committee, sought and obtained the approval of President Muhammadu Buhari, to reconstruct the iconic National Theatre, Addressing a news conference during the Federal Government’s handover of the complex to the CBN and the committee in July 2020.

CBN Governor, Mr. Godwin Emefiele, noted that the country had the potential to earn over $20 billion annually from the creative industry

Emefiele said that the National Theatre was expected to serve as the initial pilot for the Nigeria creative industry centre, adding that when the renovation of the facility was to be completed in the next 18 months, it would have been transformed into Nigeria’s creative industrial centre that will be comparable to other world class entertainment and convention centres in any part of the world.

He said: “The creative centre, which comprises music, movies, fashion and ICT can be a key source of growth for our economy creating up to one million jobs for our teaming youths. It will also aid our objective of reducing our dependence on revenues from crude oil. India for example in 2018, generated over $240 billion from exports of IT, movies, music and fashion related goods and services

“This amount is over five times our annual earnings from the sale of crude oil. With our human capital resources and an enabling environment that will help harness the creative talents of our youths, Nigeria has the potential to earn over $20 billion annually from the creative industry.”

He further stated: “Our goal for the National Theatre is to create an environment where startups and existing businesses are rewarded for their creativity. The National Theatre when fully renovated will be able to support skills acquisition and job creation for over 1 million Nigerians over the next five years.

These Nigerians will be empowered with funds at single digits interest rate, high level training using state-of-the-art tools, and networks that will enable them to turn their ideas into a reality.”

The CBN boss disclosed that when the renovation work at the National Theatre was completed, along with the construction of supporting facilities that will be built around it, including a hotel and an expansive conference centre, the Bankers’ Committee plans to build similar creative industry centres in Kano, Port Harcourt or Enugu.

CBN’s N75bn Nigerian Youth Investment Fund (NYIF)

But it is not only the bankers’ Committee that the CBN has been collaborating with to tackle youth unemployment. For instance,

The apex bank has been exploring different avenues to tackle youth unemployment. On July 20, the CBN coordinated with the fiscal authorities, especially, the Federal Ministry of Youth and Sports Development (FMYSD), to introduce a N75 billion Nigerian Youth Investment Fund (NYIF), which is designed to improve access to finance for youth and youth-owned enterprises for national development.

According to the CBN, the fund is primarily targeted at financially empowering Nigeria youth to generate at least 500,000 jobs in the country between 2020 and 2023.

Eligible businesses under the programme, the banking watchdog said, are technology/ innovation; agriculture and related value chain; green economy and renewable energy sector; logistics and supply chain; manufacturing; hospitality/ tourism and construction.

Others are the creative sector, healthcare value chain, trading and services and as well as any other activity determined by the CBN itself and the FMYSD.

The CBN further said that the global limit for loans under the fund was N12.5 billion, with a moratorium of up to 12 months, while the loan tenor and interest rate is a maximum of five years and five per cent per annum respectively.

Shedding light on the NYIF at the inauguration of applications for the scheme recently, the Minister of Youth and Sports Development, Mr. Sunday Dare, explained that the Federal Executive Council on July 22, 2020 approved the NYIF to the tune of N75 billion spread over three years to cater to youth owned businesses and investment needs, adding that the CBN, in line with the Federal Government’s directive, provided the initial N12.5 billion required for the fund to operate in the remainder of 2020.

Youths applying as individuals or non-registered businesses would be able to draw up to N250,000, while youth owned registered businesses could apply for up to N3 million, he said.

He noted that the NIRSAL Microfinance Bank was selected as a disbursement agency, given its reach and spread, which ensures that youths across the country had access to apply for the fund.