How Uwezo Fund holds the future of youth in business The government-funded enabler has allowed youth and marginalized groups to raise capital and venture into businessin business?

The past few years have seen several government initiatives to get Kenyan youth and women involved in the business. The Uwezo fund is one of the more recent. The kitty was born out of a jubilee government promise to use the KES 6 billion meant for a presidential runoff last year to fund businesses by young local entrepreneurs.

The Fund was also meant to help youth and women in Kenya take advantage of another government ‘affirmative action’ initiative that offers 30% of all government tenders and procurement to these two segments of Kenyan society.

Implementation of the Uwezo fund

According to the official Uwezo Fund website, the kitty’s administration team is guided by four essential elements when deciding on who should benefit from the Fund, as well as the conditions required for the administration to award any given loan application.

These requirements include;

  • how to achieve an equitable allocation of Fund resources to the many applicants, including the two key demographics as well as persons with disabilities, parliamentary representatives and the government.
  • Accountability of the government on how to use it.
  • The accessibility o the Fund at the lowest levels of engagement.
  • Using the most economical methods to meet set objectives

Indeed, the Ministry of Devolution and Planning voted to have approximately 3% of the Fund earmarked as administrative fees. The ministry also set aside another KES 500 million for capacity building and development of requisite infrastructure to ensure the success of the Fund.

Disagreements between the board of directors and senior management as a considerable impediment to the workings of the Youth Fund

Groups intending to apply for money under the fund must attend a mandatory training program. With proper management, we expected the Uwezo Fund administration to use at least three-quarter of the resources appropriated to the Fund to seek equal distribution of such capital resources amongst all corners of the country. Better still, it would have been prudent to favor marginalized areas, particularly those areas with the crippling suffocation of over-the-top poverty index. As a result, constituencies in northern Kenya received the most significant share of the funds this year. Mandera South and Turkana West will, for instance, receive KES 31 million and 29 million shillings respectively.

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Loans and grants are only available to groups, whether investment or community-based. The fund can provide financing of between KES 50,000 to KES 500,000. The interest rate is also close to zero (it cannot exceed one percent P.A.). Constituency Uwezo fund committees are supposed to vet groups that apply for the fund and forward names to the funds head office. This provision helped to facilitate the capacity building program.

Potential challenges to  success

As noted earlier though, the Uwezo fund is not the first such initiative to provide affordable financing to youths and women in Kenya. It’s predecessors, namely the Youth Development Fund and Women’s Economic Empowerment Fund have been in existence for almost six years now. Both have received more than KES 12 billion to date with minimal success to show for it. There are fears of possible overlap of the Uwezo fund’s mandate and other similar kitties established by the government.

The ubiquitous shadow of corruption also looms large over the project. Multi-million shilling scandals have rocked similar government initiatives. The youth Fund, for instance, lost KES 300 million in 2009 and the Kazi Kwa Vijana Project dogged by the allegation of misappropriation of funds. There have also been questions about the management of these resources.

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A report by the government’s Efficiency Monitoring Unit in 2013 cited disagreements between the board of directors and senior management as a considerable impediment to the workings of the Youth Fund.

Uptake has also been slow among Kenyan women and youth of such government initiatives. While attending the recent National Youth Convention, Deputy President William Ruto revealed that of the KES 50 billion earmarked by the government for these two segments, only four percent had been used.

It has been a long walk from 2013, and numerous lessons learned along the way. However, whether or not mistakes of the past have wisened the administration remains up for debate, and the jury remains firmly out on just how much progress the nation has had as a result of the Fund.

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