Write off ‘dead’ Helb, Youth Fund loans

 Many youths are leaving college and not finding job yet Helb expect them to immediately commence payment

They say it is easy to get a loan, unless you require it!

Now that is an oxymoron in itself, elucidating how complex the world of loans is. In the free market where Kenya as a country is an avowed elder, the factors that determine one’s creditworthiness include debt to income ratio, credit score, and repayment history et al.

These criteria even when applied minimally cuts off many individuals from accessing credit globally. It is much worse in the global south where most economies are crawling. And for obvious demographic dictates, the most vulnerable group among this lot are the youth. Since youth is that delicate age where individuals need maximum communal support for safe and successful transition from childhood to adulthood, all efforts, including affirmative action are effected to help tool young people for life.

Locally, Kenya has from time to time initiated innovative affirmative action programmes in various sectors, all geared towards youth empowerment. Among them include programmes facilitating access to education, skills development and training; access to market, information, credit and technological transfer.

In all the above, government programmes established to facilitate credit access to young people have constantly run into tempests of non-performing loans, mismanagement and corruption. Of focus here is the Higher Education Loans Board (Helb), Youth Enterprise Development Fund (Yedef) and lately Uwezo Fund. These institutions, though state run, still function like other conventional financial institutions - in many ways. It is on this baseline that a number of young people fall foul of the law, become enslaved and their progress stultified when they default for various reasons.

The Helb loan for example is given on the premise that one will after education land some gainful employment enabling them to repay. Unfortunately many youths are leaving college and not finding jobs. On the other hand, Helb expects you to commence repaying on completion of studies, failure to which you risk being listed as a bad debtor with the Credit Reference Bureau (CRB). Once listed with the CRB, one cannot access any other loan facility. Without a job and ineligible for a business loan, you are a lost cause.

On the other hand, youths trying their hands on entrepreneurship are also in dire need of affordable credit. They ultimately end up at the Youth Enterprise Development Fund or Uwezo Fund. This group too sometimes default either because they are ill prepared, not sufficiently capacitated for the venture for which they acquire loans or just out of market forces that drown their ventures. For whatever reason, there are thousands of young people who cannot access loans for any other progressive venture because they defaulted on these affirmative action loans.

Now, we have all seen the government come to the rescue of other sectors like sugar, coffee and pyrethrum in similar circumstances. It is time the state wrote off non-performing loans owed to it by young people. If a young person has been actively seeking out for employment for at least three years in vain, their Helb loan should be written off to improve their credit ratings. The same should be applied to the youths who got small loans from Youth Fund especially in its formative stages and have been unable to repay. These groups of young people are suffering and they are legion.

Meanwhile, the Helb facility should be recalibrated into a grant, not a loan. Government owned credit facilities too should be better managed and reformed.

Arnold Maliba is the outgoing Nairobi Representative on the National Youth Council.

@ArnoldMaliba

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