Tana River youths facing difficulties repaying loans

Groups receiving a cheque from the Youth Fund. The Youth Enterprise Development Fund is facing difficulties in recovering loans issued in Tana River County following increased default in repayment. PHOTO | FILE | NATION MEDIA GROUP

What you need to know:

  • Credit officer Mohammed Komora said out of the Sh9.6 million disbursed to 97 groups since 2013, only Sh4 million has been recovered.
  • He said chiefs are looking for the defaulters in order to advise them accordingly.
  • Mr Komora said the youth viewed the five percent registration fee on the loans as interest, which Islamic faith prohibits.

The Youth Enterprise Development Fund is facing difficulties in recovering loans issued in Tana River County following increased default in repayment.

The county fund’s credit officer Mohammed Komora said out of the Sh9.6 million disbursed to 97 groups since 2013, only Sh4 million has been recovered, resulting to temporary suspension of funding in a bid to recover the debts.

“When I joined the fund in November 2013, my predecessor had disbursed about Sh3 million to 79 youth groups, but the repayment rate was only 21 percent,” he said adding, “I have followed up the defaulting groups and some have started repaying while others are yet to be traced.”

Some of the youths fled after their businesses collapsed while others are still struggling.

He said chiefs are looking for the defaulters in order to advise them accordingly.

DIRECT LOANS

Mr Komora said no youth in the county had benefited from direct loans of between Sh100,000 and Sh150,000 because their groups had not cleared their first loans known as rausha.

“For example, I have not been able to disburse my target of Sh1.5 million in the direct loan kitty because none of the groups has cleared the Sh50,000 loans to qualify for the bigger loans given to individuals,” he said.

Mr Komora said loan repayment has been a challenge since many of the beneficiaries are pastoralists who only repay when they sell their animals.

He also raised concern over youth in Tana River Sub-County who have shied away from taking the loans citing religious rules which prohibit them from paying interest.

Mr Komora said the youth viewed the five percent registration fee on the loans as interest, which Islamic faith prohibits.

He said that millions of shillings allocated to the sub-county have not been disbursed due to the interest component but encouraged the youth to take advantage of the loans to grow economically.