The Free Market Solution for Job Creation In Nigeria

The Free Market Solution for Job Creation In Nigeria

Nigeria is the most populous country in Africa, with an estimated population of about 230 million. About 70% of the population is under 30, and 42% is under 15. Unemployment remains a significant issue in Nigeria. Youth unemployment in Nigeria remains a persistent and urgent problem. The National Bureau of Statistics (NBS) reported a youth employment rate of 6.5% in Nigeria as of Quarter 2, 2024, a decrease from the 8.4% recorded in Quarter 1, 2024. Despite the encouraging but unsatisfactory statistics, it does not reflect reality: millions of young Nigerians are either unemployed or underemployed. As a result, they resort to accepting low-paying jobs, jobs they would normally not do. This sometimes led to increasing mental health issues like depression among youth in Nigeria. In addition, it has contributed to a heightened rate of crime, including internet scams, robbery, kidnapping, pilfering, and other social media crimes.  

One way to reduce youth unemployment is through youth entrepreneurship. Youth entrepreneurship involves young people taking the initiative to start and run a business. This goes beyond just recognizing a business opportunity; it includes developing business plans, securing funding, and expanding the business, which often results in economic growth and job creation. Youth entrepreneurship fuels economic development, innovation, and creativity, giving young people financial independence and essential life skills.

Youth entrepreneurship is gaining popularity among Nigerian youths, given that the government and private organisations can only offer limited employment opportunities. Today, many young people own successful businesses across various sectors, including financial services, media, tech, real estate, business consultancy, agriculture, and fashion. Therefore, empowering youth entrepreneurship is important for driving inclusive economic growth and wealth creation. It means creating an enabling environment where young people can pursue their entrepreneurial aspirations. It includes providing access to adequate and appropriate education, training, mentorship, financing, and policies that foster innovation, creativity, and business growth, ultimately enabling them to create jobs, stimulate economic growth, and contribute to social development.

One of the programs launched by the Nigerian government to encourage entrepreneurial growth is the Youth Enterprise with Innovation in Nigeria (YouWIN) program. The aim of YouWin, a national business plan competition, is to create jobs by training and funding youth-led small and medium-scale enterprises. Specifically, the scheme is designed to attract promising ideas and innovations from young Nigerian entrepreneurs and provide a non-repayable grant of N1 to N10 million for the most promising entrepreneurs. The ultimate goal of the program was to turn graduates into job creators, promote economic growth, and reduce unemployment. 

YouWIN promoted entrepreneurship and job creation among Nigerian youths. The program played a crucial role in creating new job opportunities for young people in Nigeria. A total of N30.7 billion was disbursed to 3,900 beneficiaries of the program, resulting in 20,960 jobs created. The scheme has benefited both new and existing youth-led businesses, empowering young people with the skills and resources they need to start and grow their businesses, contributing to Nigeria’s economic growth and development. Additionally, a study on participants’ perception of the scheme in southeastern Nigeria found that the program has generated employment in the region.

However, despite these achievements, YouWIN encountered several challenges. Participants of YouWIN Connect accused the government of failing to disburse promised funding for their start-ups. Additionally, findings from a study indicated that the program will not survive in the long run due to inadequate feasibility analysis conducted before it started. Moreover, the study suggests that the number of youth who benefitted from the program is marginal compared to the total population of unemployed youth in the country. Other challenges encountered by the program include a complex and ineffective selection process, initial low youth and female participation, incidents of fraud and misuse of funds by awardees, as well as funding delays.

Furthermore, from a free-market perspective, the scheme allocated grants to enterprises through a process overseen by government officials rather than through market-driven mechanisms. This approach bypassed natural market selection, resulting in unintended consequences like the disbursement of funds to unsuitable and non-viable ventures that may not meet market needs. This discourages beneficiaries from being accountable and, eventually, from prudent use of resources. Youth entrepreneurship can only thrive when government policies are focused on enhancing rather than replacing market forces.

I believe empowering youth entrepreneurship is not only a moral obligation of the government but also a free-market solution to unemployment. Although the government is responsible for ensuring everyone secures a job of their dreams, the chances of fulfilling this obligation are usually slim. Therefore, in a truly free, equitable, and inclusive society, the role of government is to provide an enabling environment where every youth can freely and equally pursue their career and dreams. This includes implementing policies and programs that promote youth entrepreneurship through access to training, funding (grants, subsidies, and tax breaks), and resources; making business licences and registration easier; and including the provision of mentorship needed to achieve their aspirations, as long as that does not limit the freedom of or harm other people. Similarly, when the government invests in empowering youth entrepreneurship, such investments generate goods, services, and wealth, thereby contributing to broad-based economic prosperity for all.

To enhance YouWIN and future programs aimed at empowering youth entrepreneurship in Nigeria, the government should implement performance-based funding, where awards are given out in response to reaching predetermined business goals. For example, Startup Chile, a public accelerator program, disburses funds to beneficiaries based on the achievement of specific business milestones.  The program has not only supported over 1,500 startups, which have raised over $1.2 billion in capital and sparked a cultural shift towards entrepreneurship in Chile and but also positioned the country as a regional innovation hub.

Also, encouraging private investment in enterprises run by young people by offering tax breaks will serve as a key strategy to encourage young entrepreneurs. In the U.S., the Small Business Administration partners with private investors to fund small and youth-led enterprises.
Simplify legal regulations to expedite and lower the cost of business licences and registrations, especially for youth entrepreneurs. In Rwanda, the government implemented an online business registration system that allows entrepreneurs to register their businesses in less than 24 hours. The program not only improved the ease of doing business in the country but also led to an increase in business creation and economic growth.

Moreover, collaborating with academic institutions, non-governmental organisations, and business executives to mentor youth entrepreneurs in post-incubator initiatives has proven effective. The Tony Elumelu Foundation provides mentorship in addition to training and seed capital annually to African entrepreneurs in collaboration with academic institutions and corporate mentors. This has led to the creation of over 1.5 million direct and indirect jobs across Africa.

Furthermore, ensuring clear systems are in place for monitoring and assessing the results of entrepreneurial programs would enhance project delivery. For example, Startup India implemented an M&E system to track the progress and outcomes of funded Startups. This has helped the organisation ensure accountability, facilitate informed decision-making, and led to improved project efficiency and effectiveness.

Empowering youth entrepreneurship is not just about job creation; it is about restoring dignity, promoting innovation, and allowing young Nigerians to shape their future with courage and independence. By creating a supportive environment where ideas can flourish and hard work is rewarded, Nigeria can transform its unemployment challenge into an opportunity for inclusive growth.