Turn The Youth Fund Into A Microfinance
Young people in Kenya continue to face glaring challenges across various facets of their lives. They are confronted by insurmountable odds as they struggle for decent livelihoods, engage in enterprise, pursue education, safeguard their health or attempt to push for inclusion in governance and development processes in the country.
According to the Cross-Sectoral Assessment for at Risk Youth in Kenya report, almost 2 million youth aged between 15 and 30 years are out‐of‐school and a majority of them have no regular work or income. Kenya’s informal enterprise sector, jua kali, is estimated to engage some 70 percent of the labour force, albeit often in part‐time, underpaid, and short‐term status. The Kenya National Bureau of Statistics economic survey 2012 established that the informal sector constituted over 80 per cent of the total employment created in 2011 generating in excess of 445,000 jobs.
Given the very low growth of employment in the formal sector, the growth of micro- enterprise provides the best opportunity for youth livelihood. Investments made for youth development in Kenya have been enormous by both state and non-state actors. Initiatives such as the Youth Enterprise Development Fund were started for exactly this purpose.
The Youth Enterprise Development Fund which was meant to enhance youth participation in socioeconomic development through the provision of credit to enable young entrepreneurs to access finances to set up or expand businesses appears to be failing in this mandate. The fund has been dogged by technical, structural and governance challenges since inception and young people do not seem to be benefitting from it as banks and financial intermediaries exploit the low interests to lend to their own clients. The procedures and interest charged for accessing the youth fund remain the two biggest hurdles to youth enterprise development in Kenya.
Youth therefore feel acutely disempowered by existing governance structures and procedures, where they often have only token representation, and where policies are not implemented as stated due to a high level of corruption.
It is therefore our recommendation that to mitigate these challenges and ensure transparent flow of capital to young people for informal enterprises at the lowest interest possible, the fund must be turned into a micro finance institution. Beyond minimizing hurdles and providing the lowest interest options, a micro-finance structure will improve efficiency and effectiveness of the fund ultimately ensuring impact for individual vulnerable youth across the country.
Susan Kariuki is the chief executive officer of the Youth Agenda.