A $100 million funding package has been authorised by the African Development Bank (AfDB) to establish a Youth Entrepreneurship Bank in Nigeria. Dr. Akinwumi Adesina, the president of the AfDB, made this revelation at a speech honouring former Nigerian President Gen. Yakubu Gowon’s 90th birthday. The bank’s mission is to help young entrepreneurs in Nigeria by providing debt financing, quasi-equity, company incubation, and technical support. Adesina stressed that the program is in line with the AfDB’s dedication to assisting youth, who are essential to Nigeria’s growth.
Reversing the “Japa” tendency (young exodus) and retaining Nigerian talent within the nation were other points he emphasised. With the backing of Nigeria’s Finance Minister, Wale Edun, the bank intends to use guarantee mechanisms to lower the risk associated with lending by financial institutions to startups. According to Adesina, Nigeria would have a prosperous future as a result of this endeavour. In search of better possibilities, young Nigerians are increasingly going abroad, especially to Europe, the US, and Canada. This movement is known as the “Japa trend”. The word “Japa” comes from a Yoruba word that means “to run away.”
Nigeria’s econ growth and creativity are being hampered by brain drain.
Due to Nigeria’s high Unemployment rate, political unrest, and general perception of poor future prospects, the tendency has escalated during the last ten years. Nigeria’s National Bureau of Statistics (NBS) reports that as of 2020, the country’s youth unemployment rate was over 53%, which encouraged many of its young people to look for work overseas. Nigeria’s Economic Growth and creativity are being hampered by the Brain Drain caused by this wave of emigration, which is causing trained personnel to depart the nation. A number of Nigerian businesspeople and government representatives have expressed their thoughts regarding the Youth Entrepreneurship Bank.
Young Nigerian businesswoman Adaora Ikenna said, “This idea has the potential to revolutionise the game. For me as a small business owner, one of the major obstacles has been getting access to money. The bank could offer us the much-needed assistance.” Similarly, “If the bank can really reduce the risks for financial institutions to lend to young businesses, we might see a massive boom in innovation,” said Chinedu Okeke, a start-up founder from Lagos. With financial support from the African Development Bank (AfDB), the Youth Entrepreneurship Bank will offer financing facilities, quasi- investments, and technical assistance.
It could help reduce youth unemployment & stimulate economic growth.
In addition to offering business incubation services, mentoring, and strategic advice, the Youth Entrepreneurship Bank will ensure that young entrepreneurs receive not only financial support but also the skills and networks they need to succeed. In terms of long-term effects, the bank could help reduce youth unemployment and stimulate economic growth. Quasi-equity, a form of financing where the lender takes on some of the risk involved with the investment, will allow young businesses to grow without the burden of immediate repayment.
More so, the initiative has the potential to not only improve Nigeria’s business environment by fostering a generation of innovators and entrepreneurs, but also potentially reverse the “Japa trend” by giving young Nigerians reasons to stay and build their futures at home. Similar initiatives have been launched in Kenya and Rwanda, where entrepreneurship banks and youth-focused funds have enhanced small businesses, reducing youth unemployment and contributing to their growing tech sectors. Nigeria’s youth unemployment rate, hovering above 53%, highlights the critical need for such an initiative.
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Additionally, it is difficult for a lot of Nigerian small enterprises to continue past their first year of operation. Eighty percent of small firms fail within five years because they lack capital, expertise, and business support, according to the Small and Medium Enterprises Development Agency of Nigeria (SMEDAN). With the purpose of addressing these problems, the Youth Entrepreneurship Bank offers both money and the essential support systems to enable enterprises to remain viable over the long term. Young people in Nigeria account for over 60% of the country’s population, thus there could be millions of potential beneficiaries, which would have a significant economic impact.