Experts are optimistic that promoting venture businesses would help strengthen young entrepreneurs to convince financial institutions to extend credit to their businesses.
Alexis Rusini, a business consultant, says that with their inability to raise capital to kick start their businesses, young entrepreneurs can pool resources together to draw financial institutions to offer credit to their projects.
“If one entrepreneur is weak, they can partner with the other and build a venture business so that they can be strong enough to take advantage of the existing opportunities like access to finance,” he told Business Times in Kigali.
Moreover, bringing out innovative business ideas would also increase competitiveness and minimise risks that scare away financial institutions from lending to start-up businesses.
“Entrepreneurs must come up with businesses which are viable; it is not a matter of saying money is available then they start a business. Otherwise, people will start seeing loans as a gift,” he noted.
He added, “Opportunities are there. The only issue is (that) you must be capable because finance should not be seen a charity; there is a long way to go in terms of mindset and behavioural change for entrepreneurs.”
Coordinator of Kimisagara Centre, Emmanuel Bigenimana, says that there are efforts to link the youth to financial institutions as a way to bridge the gap that exists between the two parties.
“While the government has set up strategies like Business Development Fund (BDF) to address these issues, we have been seeing few youth willing to start up business,” he said, adding that this prompted the ministry of Youth and ICT to help the youth understand how they can work with banks.
Most entrepreneurs are not always aware of existing opportunities like guarantee funds under the BDF that aims at providing collateral to financial institutions on projects that maybe profitable but lack collateral.
“We are trying to explain to the youth the conditions banks demand to give out loans,” he said on the sidelines of a youth training on access to Finance targeting young entrepreneurs in Kigali.
Nevertheless, the Ministry of Youth and ICT a Bigenimana said, it seeks to link over 3,000 youth to BDF to access guarantee funds to start up businesses with an initial target of 500 youth in Kigali.
Analysts say that the success of the initiative will help address the issue of the country’s unemployment and under employment, which is mainly caused by skills mismatch and limited jobs.
African economic outlook report 2012 puts the average skills deficit in the country at 40 per cent. Current demand exceeds supply by 60 per cent across public, private and not for profit sectors.
“Job creation in the non farming sector, estimated at 74,000 is also inadequate for the approximately 200,000 young school leavers entering the job market annually,” the report reads.
The report indicates that policy framework for skills development and job creation for both urban and rural areas are in place but more needs to be done to translate the policies into tangible actions.