Nigeria is one of the leading countries in Africa in innovative youthful population. A visit to Yaba, Lagos, tech hub capital of the country, speaks volumes about the silent transformation taking place through the creative ingenuity of young people. LUCAS AJANAKU reports that the government needs to do more for the country to tap into Africa’s digital economy estimated at $712 billion by 2050.
According to a recent report by the Nigerian National Bureau of Statistics (NBS) and the Small and Medium Enterprises Development Agency of Nigeria (MEDAN), micro, small and medium-sized enterprises (MSMEs) account for a total of 96.7per cent of businesses contributing to 46.31per cent of the nation’s gross domestic product (GDP).
In terms of the labour force, MSMEs account for about 85 per cent of total industrial employment across sectors.
With these statistics, it is clear that more investment in terms of cash and infrastructure and intentional policies are required to tap into the huge potential of MSMEs and tech start-ups to grow the economy and de-emphasis cash from fossil fuel.
It is in the light of this realisation that the unveiling of a $618 million investment programme to promote innovation and entrepreneurship in the digital, technology and creative industries is targeted at job creation.
Tagged Investment in Digital and Creative Enterprises (I-DICE) programme, Vice President Yemi Osinbajo recalled that the project culminated from his conversation with African Development Bank (AfDB) President, Dr. Akinwunmi Adesina, in South Africa five years ago.
Osinbajo said: “What you may not have been told is the incredible effort that Dr. Akinwunmi Adesina, President of AfDB put into this to make it happen. The thinking came from a discussion he and I had in 2018 on how to leverage technology and industry for jobs for young people. He told me at the time that the AfDB was already thinking along the lines of committing some funding to some iteration of the idea.”
The i-DICE programme was unveiled, aimed at upscaling entrepreneurship and innovation in digital technologies and creative industries.
“The fund … is $618 million, out of which the AfDB provides $170 million, the Agence Française de Développement provides $100 million and the Islamic Development Bank will provide $70 million in co-financing. The Bank of Industry (BoI), representing the Federal Government, will provide $45 million as a counterpart contribution, to be availed through loans for qualifying start-ups. And as we heard from the President of AfDB, we expect, by leveraging this fund, another maybe $271 million from the private sector and institutional investors,” Osinbajo said.
The I-DICE programme is anticipated to help to fill critical gaps in Nigeria by supporting enterprise and skills development, access to demand-driven digital and creative skills, entrepreneurship skills, ICT enabled infrastructure, as well as access to finance.
Adesina said the I-DICE programme is set to be ‘a real game changer’ in Nigeria.
“It will help to create 6.1 million direct and indirect jobs and equip more than 175 000 young people with the technology and creative skills needed to drive innovation and foster entrepreneurship.
“To start with, I-DICE will support 451 digital technology start-ups, 226 creative enterprises and 75 enterprise support organisations. The benefits of the programme to Nigeria’s economy are projected to be worth $6.4 billion.
“Yes, we gather to launch the initiative, but what we are really launching is more than this. We are launching hope for the youth. We are launching platforms that will enhance the ability and capacity of Nigeria’s youth to thrive. We are launching the creation of millions of jobs.
“We are retooling Nigeria to be more competitive in an increasingly digital world. We are creating hope for a new Nigeria, driven by the power of the youth,” the AfDB chief said.
Adesina said the size of Africa’s digital economy will rise from $115 billion it currently is to $712 billion by 2050, hence the need to prepare young people.
“Most of this growth is already being driven by four countries, Nigeria, South Africa, Kenya, and Egypt.
“We are already witnessing in Nigeria the power of digital technologies, tools and platforms. Nigeria currently has five out of the 11 digital companies that have reached the status of unicorn, with a market valuation exceeding $1 billion. Names that come to mind include Jumia, Interswitch, Opay, Flutterwave and Andela, mainly in the fintech space,” he said.
Further, Adesina said the AfDB is ‘making great strides’ in empowering youth on the continent.
From 2016 to 2021, he said, the Bank supported the creation of over 12 million jobs, 3.1 million of which were direct and nine million indirect.
He said: “This has been made possible through our high employment impact operations and special initiatives in key sectors such as agriculture, infrastructure, energy, and financial sectors, as well as in the digital and creative industries.
“Additionally, the Bank’s Coding for Employment programme has provided onsite centres and digital training platforms that have equipped 23 200 youth from 45 countries with the skills needed to succeed in the digital job market.
“We have invested $2 billion in 37 tech projects to improve national and regional broadband infrastructure, foster private investment, and support digital enterprises.”
Looking ahead, Adesina said: “The African Development Bank is currently designing and will soon roll out youth entrepreneurship investment banks, new financial institutions that will build robust financial ecosystems around the businesses of young people across Africa.”
Support for young women entrepreneurs
Managing Editor of the Anzisha Prize, Didi Onwu, in a detailed analysis shared with The Nation, said Nigeria’s small-and-medium enterprises (SME) sector and its entrepreneurial ecosystem are often seen as an engine of economic activity integral to driving social change.
For example, take the 2022 Anzisha Prize fellow and entrepreneur Eneyi Oshi who, through her innovative enterprise, showcases the immense potential of entrepreneurship in serving the interests of society beyond the economy. With a love for agriculture and a desire to improve food security in Nigeria, Eneyi started Maatalous Nasah in 2019 selling chicken, fish, and eggs. Her agribusiness has since grown to help other farmers in the community to do the same, through an ecommerce platform. Furthermore, she sells farming infrastructure to those looking to grow their own produce in their backyards.
Ambitious ventures such as hers have immense potential to reduce poverty in the country in a tangible way. Our assessment of the business environment, conducted in 2021, shows that while efforts to support youth entrepreneurship have been ongoing for over a decade, there is still inadequate evidence of success in alleviating the challenges facing entrepreneurs in the country. In fact, there seems to be a growing crisis of inaccessibility of funding and investment opportunities for young entrepreneurs coupled with low skills and education rates among potential entrepreneurs.
What emerges strongly, from analysis, is the pressing need for more efforts to be directed towards promoting entrepreneurship as a sustainable livelihood option among young people. Nigerian youth need more investment in education and training programmes that will equip them, particularly when they are most impressionable (between the ages of 18 and 25) to enter the world of entrepreneurship.
This is because our assessment finds a direct correlation between entrepreneurship and employment creation and reduction of poverty. In determining the extent to which Very Young Entrepreneurs (ages 15 – 22) contribute to job creation, our analysis found that this group of entrepreneurs is much more engaged in purpose driven entrepreneurship (i.e. job creation and poverty reduction) than the older generation whose core entrepreneurial purpose is more about creating income for themselves and their households.
Nigeria needs more of these very young entrepreneurs such as Eneyi because they’re hungry, energised and ready to tackle the challenges facing their national economies right now.
Quoting from a recent report by NBS and MEDAN, he said MSMEs account for a total of 96.7per cent of businesses contributing to 46.31per cent of the nation’s GDP. In terms of the labour force, MSMEs account for around 85per cent of total industrial employment across all sectors of the economy.
“The government needs to intensify efforts to promote and support entrepreneurship as an integral part of economic rejuvenation and recovery. We make this recommendation in the assessment mainly because we have observed that despite the substantial role that entrepreneurship plays in the local economy, the sector has continued to receive very little support, leaving these entrepreneurs to navigate numerous challenges limiting their employment capacity, productivity, and ability to grow and scale. This has also limited the potential and, most importantly, the crucial impact the sector could be making towards the nation’s GDP, and the injection of new and innovative products, solutions, and technologies that could tackle different challenges while creating new markets.
“Moreover, entrepreneurship has immense potential to help many young people to become self-sufficient generators of wealth, giving them more control over their financial freedom and helping to improve their standard of living. This is echoed in our analysis conducted in the height of the COVID-19 pandemic,” Onwu said.
Unpredictable business environment
Before the pandemic, the entrepreneurs faced everything from unreliable power supply, poor broadband connectivity, inadequate infrastructure to limited access to capital and an inconsistent policy and regulatory environment.
The pandemic saw the country experience one of its worst recessions and a GDP decline of 6.1per cent. And this could only be worsened by the consequent poor policy mechanisms including ban on Twitter, cryptocurrency trading and the closure of land borders. Most small businesses suffered because of these measures.
Entrepreneurs, nevertheless, remained resilient. But that may not be enough. Eneyi’s business was itself not spared. For example, she says that when markets were shut, schools closed and travel limited, they all had to adapt: “We had birds on the farm that kept laying eggs anyway; we had animals that needed to be sold, or else our production costs would continue to rise. As a result, we needed to find a means to distribute these items outside of our usual marketing channels. So we began advertising on WhatsApp. After a few weeks of advertising on this platform and on Instagram, we constructed an eCommerce application to allow more people to locate and place orders while working around doorstep delivery.”
This is how her other business Farmisphere came to be. “We also discovered that other farmers in our neighbourhood were experiencing the same problem and were technologically incapacitated. As a result, we began selling their items as well.”
Turning challenges to opportunity
Small business owners need to continuously operate at an incredibly fast pace. Driven by the need to innovate and deliver increased value to customers, maintaining a growth momentum often requires them to scale up as quickly and effectively as possible, entrepreneurs require access to the right tools and resources to do so.
Improving access to financial services is one of the most significant ways in which we can create an enabling environment for entrepreneurship as access to financial services promotes growth, reduces poverty, and contributes to the building of sustainable economies. And the need to especially focus on women entrepreneurs as a way of transforming the economy cannot be overstated.
According to the 2021 State of Entrepreneurship in Nigeria Report, while female-led businesses remain highly vulnerable, following the impact of the pandemic, they continue to receive limited support from the government. Through targeted and institutionalised support for women, and young entrepreneurs, we would not only be able to facilitate their growth but also enhance their impact on the economy.
Efforts need to be directed towards ensuring that small businesses and startups in Nigeria can scale effectively. This will strengthen the country’s standing as a leading entrepreneurship hub in Africa, Onwu wrote.
