Graduate unemployment: Taming the monster






By Mike Osikoya


How big is the problem?

Buhari 4 Even on the part of policy makers, they usually rely on projections. But from the look of things and our interaction with people across the country, in addition to the volume of applications that organizations that dare advertise vacant position for fresh graduates openly receive, one can say with a little margin of error that four (4) out of every five (5) Nigerian graduate in the country who are qualified and willing to work are yet to get decent employment or remain virtually unemployed.  That is about 80% of our educated youth who are desperately searching for ‘unavailable’ jobs.

What then can be done?

Considering the sheer size of the unemployed graduates’ population in the country as stated above, there is need for strategic and conscious effort in that direction by all and sundry in getting the problem out of the way. There is no problem under the planet earth that God has not provided a way of escape but to solve any problem there is always the need for someone to know what to do to get out of the problem.

First thing is that all hands must be on deck to pull us out of this muddy swamp of unemployment in our country. This actually requires immediate action on the part of various strata of government from the Local to the Federal level of government and their policy formulators; with equivalent strong support on the part of corporate bodies.

And much greater responsibility on the part of the unemployed graduates themselves to come out of the unemployment labor market. This may require a re-orientation of their mindsets so that they would appreciate and differentiate between what is desirable and what is expedient at this time.

Government’s Responsibility

The role of the government in solving graduate unemployment is majorly two. One is planning and the second one is funding. Why is serious planning needed? The holy book says ‘’Any enterprise is built by wise planning, becomes strong through common sense, and profits wonderfully by keeping abreast of facts” as the organization and implementation. Government should be willing to commit itself to eradicating unemployment. This can be done not by means of the traditional Youth Employment Agency which usually achieves little or no results because of greed and the fraudulent acts of officials saddled with such important roles, but rather by investing money directly on individual graduates who need it to start businesses of their own in the country in form of ‘SEED CAPITAL’ or ‘LOAN CAPITAL’.



The Procedure

This can be done through the following steps.

  1. Government should raise money from the money market in form of three 3 years Treasury notes of about N20Billion at a reasonable rate of say, between 10% and 12%. This amount would be deposited with some selected banks, not the Bank of Industry for obvious reasons, at the same rate they were taken from the market.
  2. The selected banks will manage the funds which would serve as the initial capital for the business startups to be loaned to qualified applicants.
  3. Graduate Applicants shall be trained by Experts/ Consultants on how to write professionally satisfactory business plans in their areas of business interest or passion. To qualify for the loan, the business must be viable and sustainable on its own after two years of moratorium.
  4. The maximum amount each applicant can access should not be more than N1m or equivalent of $4,000. The reason for this is to make it manageable for the applicant. Secondly, to ensure that a large number of qualified applicants benefit from the Guaranteed Loan Scheme/Seed Capital Project as stated earlier.
  5. The business plan must pass through a thorough review and certification process by a professional accountancy firm in the country (the firm should be recommended by the respective commercial banks managing the funds. The audit most be top firms qualify to audit banks in the country but not necessarily their bank’s auditors),
  6. It is after meeting the bank’s pre qualification criteria that the applicant is deemed qualified to apply for the loan through any of the banks for government support ‘SEED CAPITAL’ to start his or her business.


       Requirements to access the loan

The following shall be required from each applicant whose business plan has been approved by the audit firm.

  1. A formal application letter for the loan by the applicant. This must be accompanied with acceptable means of identification in the form of International Passport, Voters’ ID or National ID to confirm the nationality of the applicant that he or she is a Nigerian.
  2. A professionally certified business plan by an auditor as stated above.
  3. The original Certificate of confirming completion of the programme from the university or the polytechnic from where he she graduated and the original NYSC discharge certificate.
  4. A letter from a guarantor who should have status of a senior public servant with the EOS (End of Service) benefit or gratuity expectation from the government not less than N1.5million. This must also be verified by the bank from the guarantor’s employer.

All these requirements must be submitted to the bank for proper vetting and due diligence. The bank would then release the Seed Capital to the applicant through his account opened for that purpose with the same bank.

The loan shall be granted with one year Moratorium Period in mind (a legally authorized period to delay payment of money due or the performance of some other legal obligation, as in an emergency) before repayment would start to enable the business have a strong footing.

Other Modalities

The interest on the loan shall not be more than 3% above the rate at which Government fixed the deposit with the participating banks which we stated above to be between 10% and 12% rate. This 3% rate can be broken down to 2% interest to the banks in form of their margin on the loan disbursed above the amount government secured the Treasury Bonds from the Money Market, 0.5% commission to the consulting firms to be appointed by the banks for monitoring and training of the beneficiaries. While 0.5% to the auditing firm engaged for the review of the business plan certification.

The consulting firms which would be appointed by the banks as training and monitoring group for the loan. Their role is to train the prospective applicants in the act of writing sound business plan, monitor the operations of the beneficiaries business to ensure they are working in line with the loan agreement and see to it that the business plan is well implemented and the success of the venture is guaranteed to enable it pay back the loan by the time the moratorium period is over.

A regular quarterly report must be submitted by the applicants to their respective consulting firms which must be vetted and confirmed to be the actual status of the various businesses to the lending bank.

To make the monitoring team (i.e Consulting firm) effective and comply with the project arrangement, they would provide a guarantee of 40% of their share of the fees stated above (0.5%) as a security to the bank during the duration of the loan to ensure they live up to their responsibility.

However, they will be entitled to that money at the end of the two years period when the loan is fully repaid and within the acceptable loan loss risk provision agreed with the bank.

How will the loan repayment be done successfully?

From the business plan, it must be detailed and clear to the bank how the applicant’s repayment shall be done from the profit to be generated from the business.

The repayment would be scheduled to start a year after the moratorium period and be completed within 24 months following the first year of the loan. Both the principal and interest payable shall be spread over the twelve months period depending on the repayment schedule that is convenient for the borrower and acceptable to the lender at the time of disbursement.


     The benefits of the scheme

We can look at the benefits of the scheme from the point of view of the unemployed graduate, Bank and Government and the economy at large.

  1. To the graduate applicant, this would enable him/her be self-employed and at the same time provide employment opportunities for others. Surely, the business would need more than one person to carry out the operations of the business and improve production. Expectedly, as demand for the business items start improving from the second year, each loan applicant should be able to employ at least minimum of one or two employees to assist in the businesses in essence additional job is created and the applicant becomes an employer of a sought in the shortest possible time.
  2. The bank would benefit in form of improved balance sheets size and improve profitability performance. Additionally, more staff may be required to adequately handle the scheme which in itself will create more employment for people in the sector.


  1. To the government, there would be significant reduction in the level of unemployment in the country. Within 3 to 4 years of the project, the government would have created over 200,000 jobs with an initial N20b investment in year 1 and another N20b in year 2. By third year, the scheme becomes self-financing. The first loan must have been fully paid and another cycle would start from the initial amount.
  2. If N1million is given out from N20 Billion about 20,000 graduates would benefit from the scheme in the first year. These 20,000 graduates would then employ at least 20,000 additional hands within the next 1 year and in the second year another 20,000. This would bring the employed people to 60,000 in 2 years. Same process is expected to continue in the subsequent years, and then by the fourth year we already have more than 200,000 productive jobs created and still counting. Same goes for the banks, the audit firms and the monitoring agents or project supervisors who may do this as a party time job in addition to their regular business or salary employment.
  3. If 10,000 applicants are successful in their businesses, first, it would increase the general productivity level of the country; reduce the inflationary rate in the economy and GDP of the country
  4. Crime rate and other social ills would reduce as a direct result of more people being gainfully employed.
  5. Opportunity for increase in government revenue in the form of taxes is also apparent. After 2 year of doing serious business, each of these ‘new business people’ should be capable of paying income taxes to the government. Assuming 50,000 people are paying average of N1,000.00 per annum because we have their data base now, government should be expecting annual tax revenue of N50million from these people yearly because they are now within the tax net.
  6. It creates additional opportunity for better remuneration in the country. Employers of labour may have to raise salaries and wages to attract good hands to their employment. Reason for this is because cheap labour has become scarce. Thus the per capita income would increase in the country.


     Exiting the Scheme

In case any applicant wishes to exit the scheme before the loan is fully paid, the outstanding loan balance at the time of exiting plus the interest due will be paid off by the individual or any company who employs such loan beneficiary.

This would be required before all the necessary ‘security documents’ submitted such as the original certificate of graduation, NYSC discharge certificate plus the International passport, guarantor’s letter of discharge could be released to the loan beneficiaries.


In summary, the benefits in this arrangement far out-weigh the initial amount invested in the project.

As already stated above, some of the benefits include: Large numbers of empowered citizens as a result of quality employment, increase in economic activities and reduction in the dependency ratio. Also, the propensity to save will increase once there is reduction in the dependency ratio, leading to more investment ability for people as a result of increase in saving power. This would also create more jobs and improve living standards and life expectancy would also improve as a natural consequence.

Once the project takes off, it would encourage other financial institutions to come on board. They too would design similar products to attract their own clients. More money would be moving around in the system to lubricate the economy.

The complaints that banks are not lending would change because so much business activities are going to be available for banks to support and finance while the new government policy initiative would show the direction which everybody must tow.


Mike Osikoya is a Management Consultant and Accountant and he lives in Ghana.

You can reach him at +233248951379 or m.oyemade@gmail.com


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