Factors influencing repayment of youth enterprise development fund loans by youth groups in Chepalungu constituency,Bomet County,Kenya

Abstract

The Kenyan Youth account for 38% of Kenyan Population with 15.2 million young people and is projected to increase to 24 million in 2017.High unemployment is a significant challenge facing youth and lack of capital to youth entrepreneurs compound this problem. The Kenyan government introduced Youth enterprise Fund in 2006 to provide credit to the youth to start income generating projects .Although the fund has been in operation for the last eight years, repayment rate has been low and this impacts heavily on sustainability of the fund.The purpose of this research was to investigate the factors that influence loan repayment by the youth groups in Chepalungu Constituency. Research done on Youth Fund established in different countries including Kenya shows that these National Youth Funds face challenges on management structures, inadequate funding and inaccessibility of the fund, lack of stakeholders support, limited funding due to high default rates by youth groups.That young people feel the fund is their entitlement and should not be repaid, is of great concern and may not only hamper sustainability of the fund but will also derail the objectives of the fund. The factors influencing repayment of youth fund loans are of interest, if the solutions of the above mentioned challenges are to be found.The study therefore sought to establish whether funding process influences loan repayment,secondly how group dynamics influence loan repayment,thirdly how training of youth groups influences loan repayment and lastly how entrepreneurial culture influences loan repayment among youth groups. The study used descriptive survey design and the target population was 1832 respondents with a sample size of 305 comprising of 244 members and 61 youth group officials.Random sampling was used to indentify 21 youth groups in the population.Questionnaires, and interview schedule were used to collect data and a pre-test of one tenth of the sample was taken to pilot the study. Descriptive statistics using percentages and frequencies was used to analyse data and then presented in tables.The findings indicated that funding process influenced loan repayment as the ittook long before groups accessed funds.Groupdynamics influenced repayment as groups hadpower struggles which affected cohesion and harmony in their projects performance.Entrepreneural culture influenced repayment as the businesses collapsed leaving the groups with no money for repayment and lastly lack of adequate training before disbursement of loans influenced loan repayment as youth groups lacked neccessary business skills.Based on the findings,conclusion and reccommendation for various stakeholders were drawn.