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BY KORIR JUMA,NAIROBI,10TH JUNE,2019-Youth Enterprise Develop Fund board which has been under the stewardship of Ronnie Osumba has ended its term outlining its gains attained under its tenure.
Evaluation report released by the team indicate that loan disbursement in terms of direct lending to youths increased by 18 per cent, from Ssh433 million between 2013 and 2016 to Sh514 million during the term of the board (2016-2019).
The board cited four key areas in which targets were met.
They are enterprise development, market support and linkages, commercial infrastructure development and youth employment scheme abroad.
According to the board,Loan repayments improved over the period. In 2016,the repayment rate was 58 per cent.
This, according to the board, has improved to 88 per cent.The fund recorded the highest repayment recovery in 2017-18 of Sh509 million. This was an improvement of 18 per cent from 2016-17.
Youth PS Francis Owino said the government will not scrap the need for collateral for affirmative cash advanced to women, youths and people with disability.
He said those applying for the cash must ‘sweat’ to appreciate the need to invest the money in profitable ventures and repay the loan.
Concerns have been raised over the need for collateral for the affirmative funds, with critics arguing the requirement is locking out thousands of youths from accessing the fund to start and grow their businesses.
“It is blocking (the youth) yes, but if you give free cash to anybody, the money will be consumed because most of the beneficiaries will not have business ideas. They do not have any vision,” he said.
Osumba said scrapping the need for collateral is in the interest of the affirmative funds, but said it is not tenable because public money is involved.
He said the ongoing efforts at the National Treasury to establish a Credit Guarantee Scheme is the only way to ensure the loans advanced to the youths are secure.
“We will have a third party who is willing to underwrite the loans to young people and with that de-risk any loss which then leads to the need to remove the collateral,” Osumba said.
However , the PS said the scheme will not be sustainable as repayment rates of loans advanced to youths are below 50 per cent.
“For the Uwezo Fund, for example, the repayment is below 40 per cent. But if the same youths go to the bank, they repay because they know the money is hard-earned,” he said.
However, according to the YEDF report, loan repayment rate has improved to 88 per cent this year from 58 per cent in 2016.
“The fund recorded the highest ever repayment or recovery in the 2017-18 of Sh509 million, which was an improvement of 18 per cent from 2016-17,” Osumba, whose three-year term ends at the end of the month, said.
For YEDF loans, applicants are required to provide household items as collateral for loans less than Sh500,000. Those seeking more than Sh500,000 must provide logbook or title deed for the loan.
Osumba said property provided as collateral needs not be in the name of the youth applying for the loan.
“It can be in the parent, friend, brother or any other who will agree to guarantee the loan for the young person,” he said.
In 2017-18, Sh549 million was disbursed to 109,840 youths, representing a 57 per cent improvement in the uptake of the loan compared to 2016-17.