The African Development Bank has called on governments and private sectors in Africa to grow, finance, and support large-scale youth-led businesses in the continent.
The bank also considered how to tackle “market failures” and “missing institutions” to help youth entrepreneurs succeed.
President of the AfDB, Akinwumi Adesina, said this at a virtual roundtable on ‘Scaling up Financing for Youth Entrepreneurship and Innovation in Africa’ on Monday.
The AfDB had approved its ‘Job for Youth in Africa Strategy’ to help create 25 million direct and indirect jobs and empower 50 million youth over 10 years.
The strategy aims to reduce barriers to youth innovation and entrepreneurship and address social and economic insecurity.
This is to prevent illegal migration, terrorism, and political instability among African youths.
The bank also established a multi-donor Youth Entrepreneurship and Innovation Trust Fund, funded with $40 million by Denmark, Sweden, Norway, Netherlands, Italy, and the UK.
Mr Adesina said, “We must grow, finance, and support large-scale successes of youth-led businesses in Africa. Existing financial institutions have failed to meet the needs of this rapidly growing population of the continent.
“This is due to lack of appropriate financing instruments; archaic credit risk assessments; focus on collaterals which the youth do not have; and lack of long-term financing horizon.
“That can deploy different types of financing instruments, from debt, equity, quasi-equity, and guarantees over the life cycle of the businesses of the youth.”
Mr Adesina added that the continent had several programs directed at improving the skills of the youth by countries, supported by bilateral and multilateral finance institutions.
He noted that though such programs might have helped to impart some skills to support entrepreneurship, the youth still faced financing challenges to turn their ideas into viable businesses.
“This will help to turn Africa’s demographic asset into an economic asset for Africa, and for that, we must nurture the businesses of young people.
“We must tackle market failures and missing institutions that prevent the youth entrepreneurs from reaching their potential,” he said.