The Youth Enterprise Development Fund is seeking guarantors for the loans it advances to reduce the risk of losing public money to defaulters.
Chairman Ronnie Osumba said the loan repayment rate stands at 60 per cent, implying that 355,452 of the 886,313 youth who have benefited from the Fund since 2006 have defaulted.
"We are in talks with a number of partners whom we want to come on board and guarantee future loans. The talks are at an advanced stage and in a couple of months, we will make an announcement," he said.
Osumba said the 60 per cent repayment rate is very low compared to 95-97 per cent for commercial bank loans, an indication that the loans the fund advances are at high risk of getting lost, thus need for guarantors.
“Repayment rate for agribusiness people is about 40 per cent, but when we look across the board it is about 60 per cent. We absolutely need to improve this to market rate of about 95 per cent,” Osumba said.
Acting chief executive Emmanuel Odero, however, said the Fund has set up a Loan Recovery Unit and is engaging the Credit Reference Bureau to list defaulters in "extreme cases" in an attempt to improve the rate.
“The recovery unit is engaging the defaulters and talking to them to see if they can renegotiate repayment period. We are also training applicants, informing them the need to repay their loans,” Odero said.
The Fund has given Sh11.7 billion loans to 886,313 youth enterprises across the country since its inception.
The Fund's officials spoke at the launch of a 100 days Rapid Response Result Initiative and Website at the Hotel Intercontinental yesterday.
Through the Initiative, the Fund seeks to increase loan uptake from Sh20 million to Sh60 million a month and reduce loan processing period from two months to two weeks in the next 100 days.
“Currently, two out of five youth know about YEDF. Out of this, only one knows where to get the loan. We will next month launch a massive sensitisation programme to inform the youth about the existence of this fund,” Osumba said.
He said requirement for collateral will also be scrapped once guarantors comes on board. He said this has hindered thousands of youths from applying for loans.
The Fund also plans to recover Sh300 million from beneficiaries, facilitate 1,000 youth to take employment opportunities and support 50,000 new entrepreneurs across the country to access new and existing business opportunities.
"We will negotiate with 10 private sector players to reserve contracts for youth and automate processes to enhance efficiency," he said.
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Some 364,368 youth have been trained in entrepreneurship since 2006. Another 5,666 young entrepreneurs have been facilitated to market their products both locally and abroad through trade fairs. The Fund has also helped 20,976 youth secure jobs abroad through the Youth Employment Scheme Abroad program.