The African Development Bank (AfDB) is seeking to establish youth entrepreneurship investment banks across the continent.
The proposed financial institutions will finance young people’s innovations in creating wealth. This was announced on the sidelines of the just-ended annual meetings of the bank in Sharm El Sheikh, Egypt, last week.
Dr Akinwumi Adesina, the President of AfDB, said the banks will access the critical financial resources to income generation projects run by the youth.
“When young people (in Africa) go to the bank, they only see risks in them, but not innovation, creativity and capacity to create wealth,”
he said.
He added that was the reason why the financial institutions in Africa, including the home owned, have failed young people. Dr Adesina revealed the initiative during celebrations of Africa Day held on the sidelines of the AfDB meeting in the Egyptian resort city.
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The 60th anniversary of the establishment of the African Union (AU) serves member countries to reflect on how the continent can surmount its challenges towards achieving prosperity. He urged African leaders to put resources at risk behind young people, saying it was pointless to ask for a land title as collateral from a 21-year-old youth seeking financing.
He said the fintech industry was one good example to bet on young people
“because it has quite a number of companies that are worth more than a billion dollars owned by young people”.
“It’s time to have youth-based wealth in Africa. For that to happen, we need financial institutions around them,”
he pointed out.
“If we think and know that young people are our best assets, then invest in them,” he was quoted saying.
“Ours is an initiative to establish a youth entrepreneurship investment bank across the continent to support businesses of young people,”
he said.
No details have been revealed by the continental bank as the ambitious project seems to be still in the preliminary phase.
However, business analysts consider it to be a boost to the young generation which currently accounts for 70 per cent of Africa’s population. The AfDB boss emphasised, however, that what young people need to take part in the continent’s development is not empowerment but financing.
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Albert Muchanga, AU Commissioner for Economic Development, Trade, Tourism, Industry and Minerals, noted that youths would drive the continent’s future.
“The young generation are the innovators, and they are able to take advantage of emerging technologies,”
he explained.
AfDB’s drive for entrepreneurship for the youth dates back to 2021 when it unveiled its White Paper for the continent’s economic prosperity. In its paper, the bank stated that entrepreneurship must be at the heart of efforts to transform Africa’s economic prospects.
With the African economies then beginning to rebound from the Covid-19 crisis, the focus should be more inclusive economic growth that would be triggered by digitalisation and opportunities linked to greening economies. The interventions proposed could open the door for the continent’s young and dynamic entrepreneurs to create jobs and revenues to help scale up businesses.
The White Paper aimed to guide initiatives promoting entrepreneurship on the continent to capitalise on new opportunities. The release of the paper follows the May 2021 launch of the Alliance for Entrepreneurship in Africa, in which AfDB was expected to play a key role.
The Alliance was tasked to mobilise financial and technical resources from partners to develop Africa’s private sector, with a focus on micro, small and medium enterprises (MSMEs).
The Alliance also aligns with the Bank’s concept of coordinating more effective financial and non-financial support to young entrepreneurs through African youth entrepreneurship investment banks.
The paper noted that Africa has huge potential for entrepreneurship investment banks given the increasing entrepreneurial activity. Currently, there are nearly 650 tech hubs which include accelerators, incubators, university-linked start-up support labs, maker parks, and even co-working sites.
Trade can be another catalyst for entrepreneurship, particularly given that the African Continental Free Trade Area (AfCFTA) became operational in early 2021. Entrepreneurs will make the AfCFTA work by forging new value chains and exploiting opportunities to scale up via increased trade in regional markets.
But the AfDB had managed a similar initiative aimed to promote the creation of sustainable jobs for youth and women-led startups since 2017. The Youth Entrepreneurship and Innovation Multi-Donor Trust Fund also assist MSMEs with the skills, financial support and enabling environments to run bankable businesses.