The Truth about Self-Employment
By Edwin Ekene Uhara
Self employment is a concept which has the potential of reducing the burgeoning unemployment rate in the country. Please note the word “potential” and it means, the possibility of something happening or being developed. In physics, it means energy at rest! But, in this country, self employment has become a cliché especially in government sponsored fora. I’m personally not against self employment, but we should separate facts from fictions.
There is a difference between talent and skills. While talent is raw or the innate ideas in man, skills are refined aspects of talents. And for anyone to acquire a skill, he or she must undergo training. It is the training received that can be applied to produce results in the lager society. But the unfortunate thing is that, most of these skill acquisitions centers otherwise known as tertiary institutions only train people on how to look for jobs and not how to create jobs. That is why when a young man graduates from any of the tertiary institutions in Nigeria, he will only discover that most of the things he spent time, energy and resources fighting for has no correlation with the real world.
It is a pity that what we call self employment at times is when a graduate out of frustration decides to sell l recharge cards, hawk goods on our major high ways, ride “Okada” or drive “Keke” all in the name of surviving the harsh economic realities in the country. Most times, these “Keke” they drive or ride is on hire purchase! Hence, before some of them balance the owners of those Keke, some of those Keke had already gone so bad, even beyond reparation because of our bad roads! In some states that have banned Okada Riding, all they do is to import taxi cabs and ask interested members of the public to apply for them. This is where some of them ask a graduate who cannot confidently boast of N 50, 000 in his bank account, if at all he has an account, to go and deposit about N100, 000 in a bank before a taxi cab would be given to him, where he is expected to be making payment to contractors managing the enterprise on weekly basis, until about N2-3 million which is normally the agreed terms of the transaction is fully recovered or repaid.
Similarly, most businesses we classify as small scale enterprises in the country don’t last more than five years after establishment. This is because, apart from the power or energy challenges facing the nation, some startup businesses in the country are among the most taxed enterprises! For example, most tax collectors and rate collectors in some states and local government s have no clear or definite tax assessment mechanisms. So, when the collectors see’s a booming and striving business, all they normally do is to quote a particular amount of money and ask the business owner to cough-out the money or stand the risk of locking up or sealing the enterprise. This is however not suggesting that, they are no business owners who use business chicanery to evade the payment of tax. But, the point I’m making is that, there should be objective and transparent ways of assessing businesses, before they are asked to pay commensurate amount as tax.
Also, how can a fresh graduate who has no visible means of livelihood afford the luxury of providing any of the requirements usually demanded by banks as collateral security before a loan is provided or made available to him or her? And at what rate is the loan being made available to them? The official lending rate as directed by the Central Bank of Nigeria is 20 percent. This is very astronomical compared to what banks in western world charge. It will recalled that before the reign of credit crunch, there was what was then known as subprime mortgage lending in the United States of America. Subprime lending is the act of making loans available to people who do not qualify for such loans.
Nonetheless, despite the high interest rates charged by our commercial banks, it is still better than going to the loan shacks who charge exorbitant fees or rates from those that patronize them. During his Senate Confirmation in June 2009, the Central Bank of Nigerian Governor, Mallam Sanusi Lamido was asked why commercial banks were charging exorbitant fees as lending rates, his answer was simple and direct, our banks engaged in non-bankable services.
Last year, I talked about venture capital as one of the solutions to taming youth unemployment, but, if that is not forth coming, government should supplement its You-Win programme with a scheme that makes interest-free loans available to every unemployed graduate who wants to venture in to business. To avoid frauds, there should be triangular partnership between government, banks and religious organizations. Here, government will make the money available in the banks, then, the religious bodies will partner with banks to offer trainings to the participants. At the end of the training exercise, a certificate of participation will be issued to them. These certificates will now serve as the collateral security, prompting the granting of the needed loans. The new businesses should however be exempted from tax and all forms of levies by governments at all levels until such enterprises are able to employ about 10- 20 persons per establishment. This is my perspective and definition of self employment!
This article is culled from BusinessDay Nigeria
I am of the opinion that self-employment is not what you decide doing after graduation, but having a mindset of going solo right from your days in the University.
If people with little or no education are doing great as self-employed individuals and employers of labour, I think those of us with higher education should do better provided we are ready to change our mindsets and expectations as per the labour market.
But government should create an enabling environment that will make businesses to grow.