10 January 2013

Zambia: Helping Youths Overcome Capital Woes


FOLLOWING last week's article, one of the feedbacks that touched my heart was about the difficulties youths are facing when it comes to finding start-up capital for their business projects.

The youth who wrote to this column said the challenges of having their projects funded were almost equivalent to the ones faced when looking for a job.

The reader's argument was that when a youth wants to venture into some small-scale enterprise, most banks or potential capital lenders usually ask for financial statements for the years that one has spent doing that particular kind of business.

Some even go to the extent of asking for physical proof of where the business is located.

This, the reader said, could be compared to companies asking a college graduate looking for a job to provide attestation of five years working experience; which makes it practically impossible sometimes for a youth to find a job or start an enterprise of their own.

Some banks and investors typically like to see that you've started successful businesses in the past or that you've worked in your chosen industry before they even take a second look at your application.

In other words, these people want to see some kind of commitment from youths prior to deciding whether to help them with capital or a job. Whether you are fresh from college and the number of years for the experience needed is half your age, a youth has no choice but to dance to the employer's tune of rules.

Nevertheless, as the saying goes, every dark cloud has a silver lining.

I believe there still has to be a way of going round these challenges. First of all, it is not every time that you need to get a loan to start up a business.

The problem sometimes is that we want to start straight from the top and getting a loan from the bank seems to be the only way to get started. We have to realise, however, that the only stable and wise way to get to the top is to start from the bottom.

I believe that for starters, you would have to raise your own capital before you can even ask for some help from friends and families.

It's not easy, I agree, but hey, one has to start from somewhere. Sell anything you can get your hands on (as long as it is legal).

In my opinion, the best way to get cash for your own business is to make it yourself. It's always good to have some cash or something that would show your would-be funder that you are starting from somewhere.

For instance, if you want to set up your own boutique, don't wait for capital for setting up a boutique, start small, you can start with ice blocks, sweets or even fritters and save that money for your bigger mission which is your vision.

Some people may even laugh at you, but remember that your vision to start your own company is more important than all their ridicules.

Besides, it is better you even test your commitment of creating wealth with small things. Trust me, experience is the best teacher.

I also feel parents should play a key role in their children's success in businesses.

I don't want to discuss money matters because I am not a financial expert, but I strongly believe that parents can help children identify what they are good at when they are still young - be it in business or talents.

If parents, or fellow family members, recognise what you are good at, it is better to teach and help you improve your skills in line with your talent even before you are sent to school.

For example, it is common to find that most of our soccer stars are either related to other soccer legends like their parents, brothers or uncles because these people have passed on the skill to their close family members. Call it genetic or anything; it is still a skill being embraced by one family.

Another good pattern is where you find that one family is talented in singing or playing music.

This kind of thought can also be applied to business.

If one has relatives who are involved in business, especially parents, it is important to learn all you can from them first and later, after you prove yourself, ask for start-up capital from them.

Unfortunately, most people do not see it that way when it comes to money matters and that is why it is common to find that when a successful business person or bread winner dies, the money or the business dies with them, leaving behind a trail of misguided youthful misfits.

The best way to help a youth is for the people we look up to, to remember that they were once youths themselves and had aspirations, dreams and hopes for a better future. The chains of self-centered mentality should be broken (in Jesus' name).

Once that is done, potential funders will loosen their grip on funds because they would understand how desperate situations can sometimes become for youths.

Even so, I want to emphasise that youths should do their part by showing commitment and diligence to whatever you want to deal in. They say the passion of a giver is in finding someone worthy to receive.

Don't leave anything to chance and luck, do your homework.

But, if all goes to worse and the people closest to you are not willing to invest in you even when you have a good project, you may finally think of going to the bank. This, I believe, should be the last option if all other help fails.

Shedding more light on the issue of getting capital from lending institutions like banks and micro-fins, in July last year the Government announced that a Youth Bank would be established this year (2013) which will provide affordable loans to youths who will venture into entrepreneurship or cooperatives after graduating from the Zambia National Service (ZNS) skills training centres. (The column will try to feature updates on this development in the near future.)

To supplement this good effort by the Government, I would suggest that banks should also introduce flexible loan packages for youths.

In fact, the Bank of Zambia can come up with a deliberate policy to instruct all banks in the country to be flexible when it comes to dealing with youth empowerment loans.

There are so many stakeholders out there who can come on board and bail the youth out. But, like I suggested last week, we need to showcase our projects on this platform so that those would-be funders can know about them and help us unlock our potential.

During the last two weeks, I have been receiving so many questions on the Youth Development Fund. I will try to answer these questions in the next article.

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