The Federal Ministry of Youth and Sports Development, on Thursday, October 15, 2020, flagged off the application for the N75 billion Nigeria Youth Investment Fund (NYIF) recently approved by the Federal Government.
The Fund, approved by the Federal Executive Council on July 22, 2020, is being implemented in partnership with the Central Bank of Nigeria, Ministry of Finance, Budget and National Planning and disbursed through the Nigeria Incentive-Based Risk Sharing System for Agricultural Lending (NIRSAL) Microfinance Bank – NMFB.
The Central Bank of Nigeria (CBN) Governor, Godwin Emefiele was quoted to have said the Nigerian Youth Investment Fund (N-YIF) would be funded through the NIRSAL MFB window – with an initial take-off seed capital of N12.5 billion.
The Minister of Youth and Sports Development, Sunday Dare, said that the loan, provided under the NYIF, has an interest rate of 5% per annum and a tenor of 5 years with a moratorium of up to 12 months.
The N-YIF aims to financially empower Nigerian youths to generate at least 500,000 jobs between 2020 and 2023.
239 beneficiaries get N166 million in pilot disbursement
The Ministry of Youth and Sports Development driven Nigeria Youth Investment Fund (NYIF) has successfully completed its pilot disbursement of loans totaling N165,700,000.00 to 239 beneficiaries ahead of the processing of the over three million applications so far received.
Application data showed that a total of 3,120,107 have registered for the NYIF Pre-Assessment/Training to benefit from the N75 billion three-year financing for youth owned businesses and ideas.
Of the about 1000 processed as part of the pilot disbursement, a total of 94 were disqualified from the NYIF loan after training, as a result of existing COVID 19 or AGSMEIS loan that they have benefitted from.
A total of 500 applicants have been invited by NMFB to apply for the NYIF loan after training and successful due process check while loan application by the applicants is at various times and the application is open until the applicants are able to provide all the requirements and complete the process.
Out of the 500 invited for the loan application, only a total of 393 have completed the loan application process and applied for the loan out of which a total of 293 applied early and their loan was processed and sent to CBN for approval at a total sum of N191,700.000.
On approval by CBN, a total of 239 have been successfully disbursed at a total sum of N165,700,000.
Explanation provided to the Ministry by NMFB gave reason for the disbursement to only 239, out of 293, as being because transfer failed to the account numbers of the affected applicants, due to the type of their account that does not receive deposit beyond a certain sum and system failure. These will be contacted and the process repeated.
The relatively low number of trained beneficiaries compared to the number of applications was as a result of the non-availability of funds as there was no budgetary provision for the exercise in the year 2020, which compelled the Ministry to provide the training within its existing capacity instead of using Entrepreneurship Development Institutes (EDIs).
The Ministry will scale up the number of applicants being trained once it is on board EDIs now that it has funds for training in the 2021 budget. The increased number of training will begin as soon as late January.
However, the process announced by the Ministry showed that applicants that have been screened for basic KYC and confirmed as not presently benefitting from similar initiatives from government would be invited to submit business proposals, following which those whose proposals meet the requirements for the loans would be selected for the free training and then be given the loans ranging from N250,000 for individuals to N3,000,000.00 for registered businesses.
The CBN said that the major objective of the fund was to address fragmentation of youths initiatives that prevent assessment of impact.
“The plan targets young people between 18 and 35 years and details the needed actions required to support business establishment, expansion and consequent employment creation for youths in critical economic and social sectors,” it stated.
The apex bank said that the fund was dedicated to investing in the innovative ideas, skills and talents of Nigerian youths.
Eligibility criteria for informal business enterprises
A huge percentage of youth are engaged in the informal sector. Accordingly, the NYIF will facilitate the transition of informal enterprises owned by youth into the formal mainstream economy where they can be supported comprehensively, build a bankable track record; and be accurately captured as active participants in economic development.
An eligible youth must fulfil the following conditions: Be a youth within the age bracket of 18-35 years. 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.
Formal business enterprises (Youth Owned Enterprises)
These are enterprises that are legal entities duly registered with the Corporate Affairs Commission (CAC).
Documents Required: Evidence of registration with Corporate Affairs Commission (Certificate of Incorporation and Form CAC 2A); Business questionnaire; List of Directors with BVN numbers; Evidence of regulatory approvals (where applicable);
(v) 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.
Ineligible Applicants
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.
Beneficiaries of other government loan schemes that remain unpaid are also not eligible to participate.
Training
Applicants shall undergo a compulsory entrepreneurship training arranged or approved by the Federal Ministry of Youth and Sports Development.
Eligible activities/businesses
Legally allowed activities in the sectors or focal areas listed below 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 and Creative sector, Trading and Services. Others 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.
Types of facilities
Term loan (for asset acquisition/improvement)
Individual (Unregistered business)
Shall be determined based on activity/nature of project subject to the maximum of N250,000.
Registered Businesses (Business name, Limited Liability, Cooperative, Commodity Association shall be determined by activity/nature of project subject to the maximum of N3 million (including working capital).
Experts want training, disbursement decentralized
Ken Ukaoha, a trade lawyer and specialist on International Trade and Development Law who is also the president of the National Association of Nigerian Traders (NANTS) said: “Most of the renowned associations like NANTS, Manufacturers and the National associations of commerce and Industry, mines and agriculture have youth wings that can fast track training and disbursement of these funds to the target audience.”
He said even though a number of persons have come out to apply, a lot of youths still have apathy for government intervention because of past experience and this may discourage those who should really benefit from this intervention.
He said: “We must move away from wanting these guys to come searching for us. They don’t trust us enough and we cannot blame them.
“If we want these funds to work because they are well intended and have the capacity to lift us out of the woods, but we must change our approach. Some of these targets already have the training before they get into what they are doing. What they need is the funds for scaling, we cannot lump these once in the pool with budding entrepreneurs.
Other Analysts warned that unless effective recovery mechanisms are fully implemented, default on loan repayment plans could increase the level of nonperforming loans in the banking industry.
Managing Director/Chief Executive, Credent Investment Managers Limited, Mr. Ibrahim Shelling said, ”At least it will provide some access to cheap finance for youths, who were probably unable to get funding from banks and other institutions to fund their business ideas. Hopefully, it will lead to a number of small businesses springing up to help spur growth in the country.
“However, like with other intervention funds, those that critically need the funds will most likely not be able to access it for a number of reasons i.e. lack of knowledge of the opportunity, lack of confidence to apply, inability to meet conditions etc.
“Also, there is likelihood that there will be high non-performing loans (NPLs) in the future as a result of a huge number of defaulters.
“Even though the funds are supposed to be to start businesses, a number of youths may likely consume these funds to meet lifestyle expenses.”
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