Few weeks back, the final winners for the first cycle of the Youth Enterprise with Innovation in Nigeria (YouWin) programme, a Federal Government scheme to encourage innovation and job creation, emerged.
The winners were 1,200 youths from different parts of the country whose submissions and presentations were adjudged the best in terms of innovation, job creation potential, and relevance to the nation’s economic needs. This number was selected from a total of 24,000 participants.
The YouWin idea is simple but compelling: to encourage enterprising and talented youth with grants, technical assistance and mentorship to become job creators not just for themselves but other youths as well. The idea had been tested and proved in India and other places.
Ernest Ndukwe, one-time Nigerian Communication Commission (NCC) boss, argued in Pan-African University’s Enterprise Development Centre Alumni event that government indeed has a central role in stimulating growth of SMEs. According to him, “the most important role of SMEs in the economy of a nation is job creation… The Federal Government YouWin – Youth Enterprise with Innovation in Nigeria is in tune with the government roles listed above.”
What is the state of the project now? We went to town to speak to some participants who shared their experience with us.
Mike Ike – V – Outsourcing, Abuja
Mike Ike is into Information and Communications Technology/IT-enabled Services (ITeS) business. He was one of the start-up entrepreneurs who applied to participate in the YouWin programme. He chose this line of business because “it is an upcoming industry and Nigeria has huge strengths and opportunities in the industry.” For him, the challenges in the business are dearth of human capital and inconsistent power supply. And regarding prospects: “IT-enabled Services (ITeS) sector can generate unprecedented number of jobs and engage our youths.”
What is his assessment of the YouWin programme? “YouWin! programme is fine. It connected me with a lot of other young Nigerian entrepreneurs in addition to providing opportunity for further learning.”
What is missing in my opinion is that the grant fund should be converted to equity with compulsory buy-out of government equity by the entrepreneur in three to four years. Alternatively, it should be designed as a loan so that young entrepreneurs will feel the need to break even and not relax.” Mike did not win the YouWin fund; “even though I am convinced I should but am happy for taking part.”
Where does he think his company will be in the next five years? He said “it is his desire to be among the top three ITeS sector players in Nigeria, adjudged by customer satisfaction, employee retention and profit.”
Assessing the Nigerian business environment, he said “it tends to discourage start-ups, especially with respect to funding and infrastructure.” Mike solves his power supply problem by using innovative technologies like inverter backup power and energy-efficient equipment and accessories.
For him, the small business operator is being given enough attention in Nigeria, but in reality, no. “Small businesses can hardly access funding without producing collateral. So, there is need to develop Venture Capital and Angel Investment funds.”
He added: “Government regulatory system in Nigeria is weak, outdated with overlapping responsibilities. It is in dire need of comprehensive reform.”
What is his assessment of the quality of employees in Nigeria? For him, “There is real work to be done at this level. This certificate-based learning should be augmented by exposure to hands-on experience in the real world. This can be done through incubation, industrial attachment or entrepreneurship courses within the senior secondary/higher education cadre. Such courses should be delivered by industry practitioners and not teachers/lecturers. Perhaps, such practitioners could be incentivised with private/corporate tax reductions based on number of credit hours taught.”
Umar Hamza – Vertex ERP Solutions Ltd., Abuja
Umar Hamza is a participant in the YouWin programme. ICT/ software application development business is Umar Hamza’s forte. This is his business of choice because businesses in the present age need ICT to succeed.
“With the development of internet technology, businesses operate with an unprecedented speed. The successful companies will be those who are able to leverage on this technology to drive efficiency. There is a wide gap for applications that cater for the geographic and operational needs of the Nigerian small business,” Umar said.
What is his assessment of the YouWin programme? He gives a pass mark to the programme. For him, “The YouWin programme was an interesting concept to be a part of. It was a different and original approach to support small businesses. It brought a lot of aspiring entrepreneurs together, and hopefully, has laid the foundation of future business culture in Nigerian entrepreneurs.
“The programme is however missing private sector participation, especially from the banking sector. 1,200 people out of 6,000 finalists made the YouWin cut. However, this means that, according to YouWin, 4,800 good and promising businesses are without the seed funding needed to start and/or grow. The banks should come in and support YouWin by providing minimum or cost-free financing to the 4,800 that did not make, or at the least, half of them.”
Umar added that the programme had created awareness to a group of potential customers, provided the necessary input to operational capacity as well as an avenue for potential users to give him direct advice/input to the end product.
His business is still in the infancy stage, which makes it extremely difficult. “Considering it is a new area of development, there has been limited support available,” he said.
From an operational point of view, his challenge in the business is finding loyal, dedicated developers. From a business point, the major challenge is the public’s readiness to embrace the internet as a business tool.
On prospects, he said, “The prospects are enormous. The government is driving an ICT policy that will bring access to the internet to majority of Nigerians.”
Umar believed in the next five years, his business would be one of the major players providing business applications to Nigerian small businesses, arguing that “the Nigerian business environment is very difficult; cost of doing business is extremely high, it is particularly unfavourable to small businesses and start-ups.”
For him, competition in the ICT industry is healthy because technology in the ICT industry has a lifecycle that is measured in months. “Competition keeps you on your toes to not only keep up with the market, but also keep up with technological advancement. From a business stand point, most of the direct competition comes from imported, off-the shelf software. These imported products give me a standard of measure to meet up with.”
He argued further that Nigerian small business operator does not get adequate attention, saying “it is not only funding that is the problem faced by small businesses. An important ingredient of research, information, is not available to small businesses. And at best, government regulatory systems are inefficient.”
Asked if the woman entrepreneur is having it well enough in Nigeria, he said: “All Nigerian entrepreneurs, both male and female, are not having it well. Like I mentioned earlier, the environment is not conducive for entrepreneurship and start-ups.”
For him, a lot of Nigerian employees struggle to meet the academic requirements for employment, and most of those who do lack both the attitude and ethical requirements for employment.
On how much his business is worth now, he said at the moment, because of the high leverage commonly associated with the infant stage of start-ups, the company isn’t worth a lot. For him, when the revenue stream starts and net cash flow becomes positive, “then we will be able to have a favorable assessment of the worth.”
At the inception of YouWin, the President Goodluck Jonathan articulated the following objectives, all of which have been achieved:
. Attract ideas and promote innovation from Nigerian youth entrepreneurs.
. Identify and train 6,000 entrepreneurs whose existing small businesses or new business ideas show promise.
. Identify 1,200 winners based on their business plans, including at least 150 in each geo-political zone. For each award winner, we said that we would:
· Provide financing, in the form of a grant from the Federal government that would range from between 1 and 10 million naira, depending on the business concept, and be disbursed in tranches over 12 to 18 months;
· Facilitate business registration or incorporation with the Corporate Affairs Commission (CAC);
· Provide robust mentoring and monitoring support through the period when these entrepreneurs are enrolled in the programme;
· Facilitate the development of a state of the art website for each winner’s business; and
· Facilitate the establishment of network of mentors that will provide support in form of mentoring and linkages to business resources.
A breakdown shows that there are 300 National Merit Award Winners, 180 Zonal Merit Winners (30 per geo-political zone) and 720 Ordinary Merit Winners.
In geo-political terms, this translates to:
· North Central: 204
· North East: 167
· North West: 170
· South East: 184
· South-South: 194
· South West: 281
53 percent of the winners were existing businesses;
47 percent are new businesses.
A distribution of the award winners by sectors shows that
· 273 (22.8%) of winning plans came from agriculture,
· 412 (11.8%) from services – Information Technology/Telecommunications;
· 117 (9.8%) from manufacturing – food and drinks
· 92 (7.7%) from professional services
· 67 (5.6%) from media and entertainment
via YouWin programme.