Pro-poor growth and employment promotion in Nigeria

Project description

Title: Pro-poor Growth and Employment Promotion in Nigeria (SEDIN), Phase III
Commissioned by: German Federal Ministry for Economic Cooperation and Development (BMZ)
Country: Nigeria
Lead executing agency: National Planning Commission
Overall term: 2011 to 2020 (Phase III 2017 to 2020)

Potato farmers after the harvest. © GIZ

Context

Poverty and underemployment characterise Nigeria's current economic and social situation. Around 40 per cent of the potential working population is either unemployed or underemployed. 60 per cent of them are young people between the ages of 15 and 29 (National Bureau of Statistics, 2017).

84 per cent of those employed in Nigeria work in mostly private small businesses that are not optimally integrated into the value chains. High regulatory costs and limited financing opportunities hinder their growth. Microfinance banks have yet to play an important role in financing small businesses. The high operating costs and inadequate, or lack of, risk management in banking make loans more expensive, rendering them uneconomical for many small businesses.

Objective

Employment and income opportunities for small enterprises in selected sectors have improved.

Rice farmers out in the fields. © GIZ

Approach

The project supports the development of micro, small and medium-sized enterprises (MSMEs). It focuses on three areas: improving access to financial services, improving the legal framework, strengthening service providers (e.g. advice centres) for MSMEs and enhancing management skills in MSMEs.

The project will focus on agriculture (potatoes, cassava, rice) and social housing, and on the states of Niger, Plateau and Ogun. Within the framework of European Union co-financing, the project will be extended to the states of Oyo/Lagos, Kaduna and Kano and will support the additional value chains of tomato, chilli/ginger, leather goods and clothing.

In order to improve access to financial services, the project is working with the Central Bank of Nigeria, microfinance banks and training service providers. It advises 15 microfinance banks and support staff training in corporate management and customer care. In cooperation with the Central Bank, the project promotes sector dialogue and public awareness of financial and economic affairs. It supports government, private and civil society organisations in the sustainable use of training materials developed in the project for MSMEs, women, young people and children.

GIZ and its partners are also working on reform measures to improve the environment for small businesses. The main focus here is on public-private dialogue formats and on advising the government agencies responsible for issues such as registration, land acquisition, building permits and taxation.

The project will additionally advise private and public MSME service providers and support the establishment of advisory centres. Together with training programmes, this should strengthen the development of sustainable business models.

To improve management skills, small entrepreneurs will receive six months of training and coaching (SME Business Training and Coaching Loop), for example in the areas of accounting, company registration or pricing. Working groups (Student Entrepreneurship Activity Hubs, SEA Hubs) will enable secondary school pupils to start thinking about their careers and develop entrepreneurial skills in cooperation with companies.

The consulting firms GOPA Consultants and AFC Agriculture and Finance Consultants will support the implementation of the project.

Pupils belonging to a SEA Hub. © GIZ

Results

Financial sector development: At the end of 2017, the loan portfolio of the 15 microfinance banks supported by the project amounted to approximately EUR 7.6 million. The number of borrowers rose by 29 per cent to 246,744 in 2017. The number of female borrowers rose from 65 per cent to 70 per cent during the same period.

Around 25,000 people continued their training using project materials and concepts. 530 people gained a qualification as trainers and around 3,200 as multipliers in their communities. Financial literacy has been incorporated into the curriculum of primary and secondary schools.

Private sector development: The establishment of an MSME advisory office in Niger State resulted in investments of more than eight million US dollars. Legislation has been passed in Niger and Plateau to harmonise state and local taxes, increase transparency and reduce costs for small businesses. Ogun State has reduced the time for obtaining a building permit by 58 per cent.

Private sector associations and interest groups campaign independently for an improvement in the local business and investment climate. About 250 small businesses successfully participated in the coaching and training sessions within the framework of the SME Business Training and Coaching Loop. Approximately 5,100 young people at 85 secondary schools, more than half of them girls, gained important insights into operating a small business through contact with companies and role-play.

The yields from some 2,200 directly supported potato farmers in Plateau rose from 3–6 tons per hectare to over 12 tons per hectare through training and the introduction of better potato varieties.

2,300 cassava farmers participated in training courses on agriculture and entrepreneurial skills. With the support of the project, about 4,000 cassava farmers created clusters with 30 processing companies. This increased farmers' incomes by guaranteeing procurement of their produce.

2,000 rice farmers participated in training courses on the establishment and registration of cooperatives. Manufacturers of agricultural machinery, such as local tractor manufacturers, were supported, which created 330 jobs.

In collaboration with the Federal Ministry for Power, Works & Housing, the project organised the Affordable Housing Summit, which then resulted in the development of the National Housing Programme. 2,700 residential units have been built for low-income households to date.

Further information