Factors Influencing the Repayment of the Youth Enterprise Development Fund Loan by Youth Groups in Sabatia Constituency

Abstract

Despite numerous international resolutions to provide young people with opportunities to participate in all aspects of the society and particularly decision making,Youth iv development initiatives in many parts of the world continue to face obstacles at local, national and international levels. In Kenya particularly, unemployment has been on increase with the youth being the main casualties.Despite numerous policy efforts, poverty and unemployment continue to affect many Kenyans.The Youth Enterprise Development Fund was established in the year 2006 as one of the Government initiative of increasing economic opportunities and participation by Kenyan youth through enterprise development and strategic partnerships. The plan by Government to reduce unemployment among the youths through the Youth Enterprise Development Fund seems to have hit a dead wall due to low recovery of the loans. The objective of the study was to find out the factors that influence the repayment of the Youth Enterprise Development Fund loan by youth groups in Sabatia constituency,Vihiga county. These include; group dynamics,credit appraisal processes,repayment infrastructure and follow-up mechanisms as well as various loan characteristics. The study adopted a descriptive survey design where data was collected from fifty youth groups funded through Youth Enterprise Development Fund in Sabatia Constituency and two YEDEF employees in the constituency.Data was collected using questionnaires which were edited, coded and analysed using descriptive statistics facilitated by use of Statistical Package for Social Sciences. The results indicated that various loan characteristics which included among others;amount of loan awarded by YEDEF to engage in business and the time taken between application and receipt of the funds were the main cause of default. The following recommendations were made to theYEDEF Board; adequate resources and relevant training should be provided in order to enable smooth monitoring of all funded youth groups in addition to setting up a legal framework on how to handle defaulters. Finally thorough credit appraisal of youth groups before awarding them any loan should be done in order to fund only viable and sustainable projects. The results will be useful to the government and other policy makers in making decisions on appropriate measures which can be put in place in order to reduce default rate. The findings will also benefit the donor community and other stakeholders who may have an interest in funding youth development activities.