Youth fund set for overhaul in efficiency quest

Youth Enterprise Development Fund Chairman Ronald Osumba chats with participants during the launch of 100 days rapid results initiative at Intercontinental hotel on August 17, 2016. Mr Osumba said that though the fund has had substantial impact, young people are yet to fully realise its potential. PHOTO | JEFF ANGOTE | NATION MEDIA GROUP

What you need to know:

  • Of the total Sh11.9 billion lent out to 886,313 youth countrywide over the period, young people in Nairobi have received Sh2.3 billion in various loan products.
  • Interestingly, though, 18 counties have not received a single shilling in Local Purchase Oorder financing while only five counties have so far received bid bonds.

The Youth Enterprise Development Fund plans to overhaul the way it disburses money, chairman Ronald Osumba has announced.

In a status report submitted to the government and dated September 30, Mr Osumba said that though the fund has had substantial impact, young people are yet to fully realise its potential.

“There is a need to tailor allocations of the loan given to the youth to specific and profitable ends,” he said in the report.

He went on: “Our youth have stood at the top of the world when called upon to represent our nation, especially in sports and the arts. We equally owe them the best that the world can give.”

Mr Osumba said it is his desire to transform the fund into an efficient, responsive and impactful entity that addresses current and future economic opportunities for young people.

The report also shows that youth in Nairobi have received the lion’s share of loans disbursed by the fund since its inception 10 years ago.

Of the total Sh11.9 billion lent out to 886,313 youth countrywide over the period, young people in Nairobi have received Sh2.3 billion in various loan products.

Kiambu County is a distance second, having received loans worth Sh894 million, followed by Nakuru (Sh746 million), Meru (Sh690 million), Nyandarua (Sh491 million), Uasin Gishu (Sh452 million), Murang’a (Sh427 million) and Mombasa (Sh410 million).

Those in Samburu County received the least amount at Sh11 million, followed by Mandera (Sh17 million), Tana River (Sh22 million), Marsabit (Sh23 million), Lamu (Sh24 million) and Wajir Sh27 million).

The report adds that a total of Sh1.7 billion in loans have been extended to 33,714 youth groups in Nairobi through financial intermediaries, while 349 groups that won government tenders have benefited from Sh205 million in trade financing.

Another 1,635 loans, amounting to Sh169 million, were extended to the Nairobi youth in the form of the Constituency Youth Enterprise Scheme, 394 loans worth Sh21 million through the Easy Youth Enterprise Scheme and another 186 loans worth Sh123 million through Vuka, a business expansion loan for individuals, companies, groups and partnerships.

And in what shows the endeavour by urban youth to embrace agriculture, Nairobi received the second-highest number of loans (31) in the Agri Vijana category, only second to Kiambu County that got 41 loans.

The fund provides greenhouses alongside certified seeds, drip irrigation systems and agronomical support on interest-free credit.

DEFAULTS

Nairobi also ranks highly among beneficiaries of poultry incubator loans, a fund that provides computerized poultry incubators on credit.

Interestingly, though, 18 counties have not received a single shilling in Local Purchase Oorder financing while only five counties have so far received bid bonds.

Counties such as Kakamega, Busia, Isiolo, Kisii, Lamu, Mandera, Marsabit, Samburu, Tana River, Wajir, Turkana and West Pokot have also not benefitted from any greenhouse loans.

According to the youth fund status report, implementation of its programmes has been hampered by the constant slashing of its annual allocation by the Treasury, which has seen demand for services overwhelming resources.

Other challenges cited include the massive time and money invested in preparing the many young people who lack entrepreneurial skills to manage loans, as well as inadequate financial infrastructure in parts of the country, inhibiting disbursement and repayment.

“Despite the high uptake of loans, YEDF still experiences defaults, mainly as a result of lending to a clientele that is perceived to be risky. This eats into the money available for lending,” the report adds.

Mr Osumba admits that the fund can do better as much as it has registered notable progress.

“We plan to streamline processes to bring in efficiency. We plan to invest in robust and efficient systems that will lay the foundation for automation and for availing our services on the mobile phone platform that is popular with our youth,” he says.

“We are also working at matching our turnaround time to the banking sector.”