The African Development Bank, AfDB, has launched a Youth Entrepreneurship Development Fund to support African youths with easy access to finance in setting up Micro, Small and Medium Enterprises, MSMEs.
President of the AfDB, Akinwumi Adesina speaking on Monday at a Virtual Roundtable on Scaling up Financing for Youth and Innovation in Africa, decried that over 60 percent of the MSMEs in Africa, “cite lack of financial access as the main bottleneck for their growth, and the risk of their survival”.
“This is because financial institutions simply do not understand their businesses and tend to overestimate the risk of lending to MSMEs. This has led to MSMEs financing gap in Africa estimated at $330bn, and left 51 percent of the continent’s 44 million MSMEs without the financing they need to grow,” he said.
According to Adesina, only three percent of the youths in sub-Saharan Africa grow their business by borrowing, while only 10 percent manage to save up at financial institutions.
He added that “while several countries have launched youth empowerment programmes, majority simply offer the youths hand-outs”. He said “Africa must move beyond youth empowerment to youth investment”.
Ms Arancha Gonzalez Laya, Minister of Foreign Affairs, European Union and Cooperation, Spain, speaking at the Roundtable, affirmed that youths are the “engine” for sustainable growth and social economic stability.
She added that Africa must create up to 20 million jobs “to be able to absorb the incorporation of the youths to the labour market”.
“This is a topic very close to my heart. Africa is the youngest continent of all. 60 percent of the population is younger than 25 years.
“There is frequent talks about Africa’s demographic dividends, but it will only come about if the youths are gainfully employed.
“No government, African or otherwise, can create jobs at that scale. It would have to be through private investments and entrepreneurship. Entrepreneurship is recognised as a driver for economic growth. The business climate in Africa is extensively difficult,” Spain’s foreign minister added.
Ms. Laya further lamented that young people in Africa face institutional and structural barriers in accessing the financial system, adding that this youth initiative will be a key instrument to spur “youth-led innovation and business ventures, and at the same time create quality and decent jobs and turn Africa’s youth demographic advantage into a strong and clear asset for the continent”.
She noted that it would be crucial to give youths access to appropriate financial mechanisms, capacity building, as well as implementing legal and institutional reforms to address the barriers they face in accessing financial corporate markets.
