There is a need for establishing and rolling out a "Youth in Business Fund” to enhance access to financing for youth-led businesses and enterprises, John Bosco Kalisa, the CEO of the East African Business Council, has said.
The fund was one of the proposed resolutions at a sideline event during the Youth Connekt Africa summit which concluded in Kigali on Saturday, October 15. The fund, according to Kalisa, will help youth-led businesses and enterprises tap into African Continental Free Trade Area (AfCFTA) Agreement.
The AfCFTA is an ambitious trade pact to form the world’s largest free trade area by creating a single market for goods and services of almost 1.3 billion people across Africa and deepening the economic integration of the continent.
The AfCFTA aims to reduce tariffs among members and covers policy areas such as trade facilitation and services, as well as regulatory measures such as sanitary standards and technical barriers to trade. The agreement was brokered by the African Union (AU) and was signed by 44 of its 55 member states in Kigali, Rwanda on March 21, 2018.
Under the AfCFTA agreement, member states of a bloc should have at least 90 per cent tariff offer to be allowed to trade within the framework on agreed rules of origin.
Experts have agreed that concrete policy measures are necessary to ensure that Africa’s women and youth – the drivers of the African economy – can be better integrated into the value chains, jobs and opportunities stemming from the AfCFTA Agreement. The SMEs run by women account for close to 60 percent of Africa’s GDP, creating about 450 million jobs and, the continent’s youths are also at the cutting edge of technological advancements; particularly developing the latest software to drive e-commerce. This is why, experts say, the AfCFTA Protocol on women and youth in trade is indispensable.
"This is a big market opportunity for the youth to create jobs. What we need is that governments address non-tariff barriers that could impede the youth in business while seeking to leverage the opportunity,” Kalisa said.
Kalisa said that a special fund for youth in business is needed to address their barriers considering that Africa is the youngest continent in the world as 65 per cent of the population is under the age of 25.
"The youth in business need cheap loans and lowest interest rates. The special fund for youth should address such barriers. African youth business council has also been proposed,” he said, adding that AfCFTA could create more jobs for African youth.
Youth are set to benefit as manufacturing alone stands to benefit the most under the AfCFTA – creating up to 16 million new jobs. Effective AfCFTA implementation can create two million jobs for east Africa, according to studies.
"The youth in business should be exempted from taxes and benefit from capacity building,” he noted.
The proposed fund to support youth in Business and help them leverage AfCFTA opportunities needs at least $billion initial capital to start operating, Kalisa told Doing Business.
"The fund has to provide venture capital to the African youth where they can get money to do business and pay back gradually at zero interest rates. All risks and challenges should be mapped so that the government devises measures to address them using the proposed fund.”
The funds will be mobilized from African governments and funders such as the European Union, UNDP and the World Bank.
Jean-Chrysostome Ngabitsinze, Rwanda’s Minister for Trade And Industry, indicated that a strategic plan is being worked to guide on how women and youth could benefit from the continental free trade area. He said that the ministry will also consider any challenges and barriers expressed by women and youth in business to ensure they are addressed.
"For instance, they are saying that Rwf500, 000 – which a business is required to get a certificate to start business – is too much. We will assess this issue. We need to lift the potential of young Africans to ensure that they benefit from the inclusion of youth in the AfCFTA.”
Adopt a Made-In-Africa mindset
Wamkele Mene, the Secretary-General of the AfCFTA, said: "Youth in Africa, who are the majority, need to adopt a Made In Africa mindset where they embrace goods made in Africa that will allow the acceleration of trade by companies between different countries.”
The just-concluded YouthConnekt Summit ended with a commitment to shore up investments in youth by African governments, to help them realise their potential and make significant contributions to the advancement of the continent.
The summit, the fifth of its kind, brought together more than 9,000 youths from across Africa under the theme "Accelerating Investments in Youth” ended on Saturday, October 15.
The commitment also feeds into the wider goal under the Africa Union Agenda 2063, that aims to reduce unemployment among the youth and women by at least 25 per cent, as elaborated by Rwanda’s Prime Minister Édouard Ngirente during the closing of the three-day summit.