National Contest Spurs Economic Growth In Nigeria | KUOW News and Information

National Contest Spurs Economic Growth In Nigeria

May 13, 2016
Originally published on May 13, 2016 3:54 pm
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Creating jobs is hard. Economists and politicians have tried and tried to find anything that will help boost employment, and it's especially difficult in the developing world. Alex Goldmark of our Planet Money podcast brings us the story of an attempt to create jobs through a nationwide contest.

ALEX GOLDMARK, BYLINE: In 2011, Lariat Alhassan had a business in Abuja, Nigeria selling house paint. It was a small business.

LARIAT ALHASSAN: The employee I had was just me. I was the production manager. I was a marketer. I was the delivery person. I was the everything. (Laughter). I served as security.

GOLDMARK: A hungry young CEO, one employee, a security guard and good paint. She knew it was good because potential clients would say they wanted to place a big order, but then too often they'd find out she didn't have an office, just her car, and they'd back out. She was feeling stuck. And so she had listened to the radio late at night to cheer herself up, and these ads kept coming on.

(SOUNDBITE OF AD)

UNIDENTIFIED MAN: It may be small today, but it won't be after YouWin, the Youth Enterprise with Innovation competition. YouWin is a nationwide jobs creation project.

GOLDMARK: The Nigerian government was giving away $60 million to aspiring entrepreneurs. It was part of a push to fight youth unemployment. Alhassan entered the contest. She had to write up a business plan, go to four days of training and then wait while an independent accounting firm scored all the entries. When she got the email saying she won, she says she started jumping up and down on her bed like a kid.

ALHASSAN: And so my sister would say, what's wrong with you? Have you won - have you won a lottery? And I said, yes, yes, yes. (Laughter).

GOLDMARK: The average winner that year got $50,000 - a huge sum - and almost no strings attached. Chris Blattman is an economist at Columbia University. He says contests like this had given out a few thousand before per person and done OK, but 50 per winner? Risky. Because it is incredibly hard to know in advance who will spend a pile of money wisely and who won't.

CHRIS BLATTMAN: I would've thought that the first $5,000 or $10,000 of that capital would be really well spent, but the next $40,000 would almost be too much.

GOLDMARK: If it were easy to tell the difference between the tiny paint company ready to boom and the tiny paint company about to go bust then the contest wouldn't really need to exist. Banks really struggle with this in developing countries, and here is Nigeria and this YouWin competition betting that they can do it on a massive scale with a business plan contest. And, it worked. According to the World Bank, the 1,200 winners created 7,000 jobs by the three-year mark.

BLATTMAN: So clearly they were using most of that whole money really effectively. I wouldn't have thought they could do that.

GOLDMARK: It was a better bang for the buck on job creation than anything Blattman has seen on a scale like this. And it's not totally clear that it would work in other countries, but he's waiting to see if anyone else tries it. Lariat Alhassan, our paint salesperson, marketer and delivery woman, her title now is just CEO. She used her prize money to hire people in those other positions and to rent a show room.

ALHASSAN: Yes, yes - because I can confidently say now, please come to my office. Oh, we are in so-and-so place, you can come here. Oh, what time? Oh, yes, I'll be ready for you. Oh, I'll be waiting for you.

GOLDMARK: Along with 10 employees, including security. Alex Goldmark, NPR News. Transcript provided by NPR, Copyright NPR.