The President of African Development Bank (AfDB), Akinwumi Adesina, said on Wednesday the multilateral lender would soon establish investment banks for young entrepreneurs on the continent.
Adesina, who stated this at the Commonwealth Business Forum in Kigali, Rwanda, criticized the structure of the existing commercial banks on the continent.
He said the current financial institution model in Africa was not designed to favour the youth, adding that if 21-year-olds try to obtain loans from banks they would ask for 40 years’ tax receipts in a bid to discourage them from accessing financial support.
The AfDB chief stressed that the Youth Entrepreneurship Investment Banks would focus on the lifecycle of a business, including credit and equity backing.
It was gathered that the youth-oriented bank, which is expected to create wealth for the continent’s young populations, is currently being designed and would be ready by the end of this month.
Adesina said: “Our financial institutions are not set up for young people, we have a missing market to serve them. We have a population of 455 million, it’s going to rise to 845 million by 2050. So we have to create a new financial ecosystem around young people.
“And that’s why at the African Development Bank, we took the decision that we are going to now create what is to be called Youth Entrepreneurship Investment Banks. They will be new financial institutions that will create ecosystems of support around the businesses of young people.
“Today, you go to a bank, you try to get money, they ask you how old are you, you say 21 years old, they say go and bring your tax receipts for the last 40 years, what does that really mean?
“But this Youth Entrepreneurship Investment Banks will finance the businesses of young people in a lifecycle model, throughout as you use different instruments; from technical assistance, to debt (and) equity financing to grow their businesses.
“The point I’m trying to make is this, the future that we are talking about at the beginning of this panel, for it to happen, we have to create new financial institutions that can create youth-based wealth.
“That is what we are focusing on. And those institutions by the way, we are designing them now, and will be ready by the end of this month.”