Fun fact – Lagos is both the smallest state in Nigeria and the most populous, with over 21 million people. Why is this piece of importance? It emphasizes the level of assistance Lagos needs in ensuring that its teeming and ambitious youth population – squeezed in a highly dense space – is adequately supported. The youth population is more likely to go into entrepreneurship and more likely in need of skills that make them employable than any other age group. Moreover, Nigeria’s youth unemployment (underemployment included) rate towers at 55%, making the youth population the most vulnerable in a period of job losses.
To ameliorate the issues surrounding entrepreneurship and employability, the Lagos State government created the Lagos State Employment Trust Fund (LSETF) – a N25 billion fund to invest in the businesses of small and medium scale entrepreneurs who currently reside in Lagos. The fund will also train residents to qualify them for better jobs.
Clearly, with the number of potential businesses and individuals it will need to support, the LSETF has its work cut out. Having useful data on this segment of the population will be key to the LSETF achieving its goal. This requirement elicits two questions: what determines the usefulness of the data and how can the fund obtain this data? The answer to the first question depends on what needs to be used as a metric of progress or success.
Two types of data will be needed to answer the first question: data that measures actions taken by the LSETF and data that measures the effectiveness of said actions. The first must not be confused with the second – action must not be mistaken for success. Sounds philosophical? Here are two examples: when Nigerian state governors boast of improving state education by building new schools or improving healthcare by building hospitals. These metrics measure action and not result, neither are they evidence of the effectiveness of said actions. Building a new school does not necessarily mean an improvement in education. New school buildings might be correlated to better education, but it’s a highly tenuous relationship. The same applies to healthcare and building new hospitals.
This same relationship applies to whatever data the fund will choose to measure. The LSETF will have to differentiate between the act of disbursing funds to SMEs and the potential result of growing sustainable SMEs and successful entrepreneurs. Data that indicate progress include a rise in the number of new SMEs in Lagos, a fall in the percent of small to medium businesses that fail, year on year growth of SMEs and a fall in unemployment and a rise in job creation.
However, knowing what to measure is one step, while knowing what to do to get these measurements in the right direction is an entirely different step. The LSETF must then be wary of what it assumes are policy solutions to the issue of unemployment. Here’s a World Bank finding on employment programs: “In high-unemployment environments, wage subsidies, skills training, and job search support are of little impact; and demand-side interventions are needed. Strong diagnostics are important to design interventions for youth in low-income areas.”
It’s not enough to make these youths employable, the fund has to work with the private sector on tailoring its trainings to their skill demand and creating recruitment programs in partnership with private sector to ensure that those that finish training have a higher probability of getting a job. Just because you create supply doesn’t mean demand will come. To match up with private sector demand for labour, LSETF will need to seek private demand-side data. Such data includes skill requirements of companies as well as skills and knowledge gap of youths.
Understanding the business environment is another point where monitoring the data is important. The surrounding business environment limits the effectiveness of a number of interventions and this could potentially be the case for the LSETF. A good place to start when trying to figure out how to streamline arduous procedures faced by entrepreneurs is the metrics from the yearly Ease of Doing Business report. These metrics include procedures, time, cost and minimum capital to open a new business, find affordable housing, rate and number of taxes businesses pay etc. Working with other government bodies to reduce the number of steps in each of these processes significantly increase the effectiveness of the LSETF’s efforts.
Whatever the LSETF decides, it must ensure the fund applies an evidence-based approach to its operations. Its interventions must be informed by relevant analytical work or due diligence on their strategic relevance that also addresses likely costs of possible interventions. The potency of accurate data is 50% its presence and 50% its application.
Now that we know what the fund must find, the next step is getting it. Getting the right set of data needed across the entire process we’ve described is certainly a challenge. However, leveraging off the work of others through partnerships. To close the gap in data, the fund can work with a number of private sector organisations with a history in employment, job creation, financial and entrepreneurial support like Jobberman, Tony Elumelu Entrepreneurship Program (TEEP), and financial bodies like the Bank of Industry and commercial banks. Partnering with an expert body such as the Nigerian Bureau of Statistics (NBS) to support state-level collection of labour market outcome data through relevant surveys could potentially close the knowledge gap.
The fund can also adopt practices that have shown evidence of success in countries with similar socioeconomic context like the Liberia Youth Employment and Skills project that targets employment in the informal sector by supporting small businesses and stimulating demand for skills among these employers.
Data influences the entire process of policy: from descriptive to prescriptive – it must do the same for the LSETF. With a competent leadership and a private sector board, the fundamentals have been set in place. The next step will be to act on the right policy influenced by the right data and vice versa. By using the right data to drive Lagos’ entrepreneurial attitude, the Lagos State Employment Trust Fund (LSETF) has a clear shot at catalysing the state’s growth to a rate comparable to its population.