Factors affecting repayment of youth enterprise development fund in Kasarani Constituency, Nairobi County, Kenya

Youth development in many parts of the world continues to face obstacles at local, national and international levels, despite the numerous international resolutions calling for states to provide young people with opportunities to participate fully in all aspects of society. In Kenya the employment challenge has been growing overtime with the youth being the main casualties. Despite numerous policy efforts, poverty and unemployment continue to afflict many Kenyans. The Youth Enterprise Development Fund is one of the Government initiative established in the year 2006 with a mission to increase economic opportunities and participation by Kenyan youth through enterprise development and strategic partnerships. The plan by Government to reduce unemployment among the youths through 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 affect the repayment of the Youth Enterprise Development Fund in Kasarani Constituency, Nairobi County. These include business performance, socio-economic factors, repayment infrastructure and follow-up measures as well as disbursement levels. The study adopted a descriptive research design and employed both stratified random sampling and simple random sampling to select the sample from which data was collected out of the 36 active youth groups funded through Youth Enterprise Development Fund in Kasarani Constituency. The data collected using questionnaires was edited, coded and analysed using descriptive statistics facilitated by use of Statistical Package for Social Sciences. The results indicate that most of the youth officers had not attended any training on micro loans and that there are no clear procedures and guidelines on lending and follow up. Further, there are no adequate resources to perform fund activities in addition to the amount of loans awarded to the youth being too little. Youths had problems in borrowing money including long duration taken between application and receiving of funds. Business performance was ranked as the main cause of default. The following recommendations were made to the management of the fund: Ministry employees should be trained on the required skills of micro-credit while a regular capacity building among the youths should be effected so as to empower them. Adequate resources 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. Regular review of interest rates and the minimum loan amount should be done in order to accommodate the changes in economic situation. Finally, a thorough vetting of groups before awarding them any loan should be done in order to ensure that they are sustainable and that their businesses are viable. 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 donors and other stakeholders who want to fund youth activities in the model of Youth Enterprise Development Fund or in grants.