More young people are now taking up credit offered by State agencies such as the Youth Enterprise Development Fund (YEDF). This has seen the fund report increased uptake of loans.
According to the funds’ Chief Executive Josiah Moriasi, most youths are shunning politics for business ventures to eke out a living.
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He says electoral turmoil, sporadic unrest and economic slowdown hit the youth hard, and those who lost valuable business investments are making a comeback through loan incentives as the economy rebounds.
For years, the youth had feared taking up loans due to ignorance or fear of being auctioned for default.
But Moriasi said YEDF is working with those interested in startups loans, agribusiness and creative industry to expand their business.
YEDF Chairman Ronny Osumba said they intend to disburse Sh1 billion this financial year, up from Sh352 million given out last financial year.
The loans are part of the State’s effort to reduce unemployment among the youth. Mr Osumba, like Moriasi, noted that thousands of youth are now applying for the loans and this could see the yearly allocation reviewed upwards.
“We have recorded an impressive hike in monthly loans uptake steadily from a paltry Sh20 million in 2016 to Sh100 million to date,” he said.
But the figure is rising as they process applications and disburse as the demand for the various loans products offered by YEDF rises. YEDF offers bid bond and local purchase order or local service order financing to youth participating in government tenders.
The loan is available to individuals, registered groups, partnerships and firms owned and run by the youth.
They also have loans for starts up and agribusiness. Osumba says the newly instituted changes at YEDF will ease access to loans. A notable change is group membership. Initially, they were not giving loans to registered groups with less than five people but can offer credit to any youth or group as long as they can repay. “We were not allowing groups with less than 20 people to secure loans but now even five organised people can make a group and apply,” he says
YEDF has also been able to increase cash allocation for business expansion from Sh2 million to Sh5 million. “We have also automated services which have in return reduced loans turnaround from two months to three weeks,” Osumba explained.
Moriasi says the disbursements of loans has hit Sh600 million even as thousands of applications are being processed.
He observed that they have been forced to expand start-up loans scheme to offer young entrepreneurs enough money to either start or expand businesses, noting that the start-up loans applications picked up in December last year, and is rising steadily.
The loans repayment which was weak beneficiaries has also gone up.
Mr Moriasi said they have so far recovered over Sh500 million loaned to various youth groups and individuals in the last two successive financial years.
“The loan repayment percentage has increased from the initial 69 per cent to 89 per cent this year. This is after they warned the defaulters against being blacklisted,” he said
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Although the fund has been in operation for 12 years, repayment rate has been low impacting heavily on the sustainability of the fund.
Uptake of loans has also increased from 65 per cent to 85 per cent this year due to the partnership with local administrations in the 47 counties to create awareness of YEDF terms.
Today, more than 50,000 youth have applied for the loans so far, but if the target is to be met then almost over 42,000 entrepreneurs will have to take out the loans. Mr Moriasi said the huge numbers of new business firms viable for the future of our youth country.
“The YEDF role is to do everything we can to encourage more start-ups and then to help them to grow, to get finance and take people on,’’ he told youth entrepreneurs. The board wants YEDF loans scheme expanded to those aged between 30 and 45 in order to avail funds to more start-ups. In an interview, Moriasi said they are training youth in Nyanza and other counties to create awareness.
The fund’s Training Coordinator Maurice Ondiek was optimistic about training more youth to access the YEDF loan facility. “Training is part of the conditions that the youth in business must meet to access the kitty upon being issued with a certificate of compliance,” said Ondiek.
Moriasi promised to work with the registered youth groups and allow many of them Access Government Procurement Opportunities.