The Youth Enterprise Development Fund (YEDF) budget allocation for the financial year starting July has been cut by more than half, according to National Treasury documents tabled in Parliament for approval.
The Kibaki-era affirmative action fund, which was created to support youth-owned enterprises to access low-cost loans, has been allocated Sh225.02 million for the new fiscal year for recurrent and development expenditure. This is a 55 percent reduction from the Sh500.08 million that was allocated in the current financial year.
The documents show that YEDF allocations, which are under the State Department for Micro, Small and Medium Enterprises (MSMEs), have been transferred to the Youth Affairs and Creative Economy Department.
This means that the fund will be divorced from others, such as Uwezo and Hustler, that fall under the MSMEs department.
YEDF chief executive Josiah Moriasi said in a statement that the fund has been allocated a budget and will continue being in existence for the next financial year.
“YEDF has disbursed loans totalling Sh1.4 billion in the past three years and provided business support services to 380,000 youth, directly impacting positively on their enterprises.”
The recurrent budget for YEDF, which caters for administration, maintenance and remuneration of staff, has been slashed by 61.54 percent to Sh125.02 million, while development expenditure (for loans to youth-owned businesses) has been cut 42.86 percent to Sh100 million.
Mr Moriasi said the fund projects to recover Sh635 million from outstanding loans and generate an additional Sh62.5 million through appropriations in aid. This will raise the budget for loans to Sh735 million, while that for recurrent expenses is forecast to hit Sh187.5 million.
Auditor-General Nancy Gathungu, in her review for the year ended June 2022, gave a qualified opinion on accounts of the YEDF.
“The fund continued to register dismal performance, reporting a deficit of Sh123,233,755 [a sharp jump from Sh11, 625,570 in the prior year].”
“The poor performance has prevailed over the last seven years,” Ms Gathungu wrote in the audit report.
The YEDF is earmarked for a merger with other affirmative action funds — Women Enterprise Fund and Uwezo Fund — under recommendations made by the Treasury and President William Ruto’s Council of Economic of Advisors on reforms for State-owned enterprises.
“The fund wishes to inform Kenyans that, on recommendation of auditors, it carried out a revaluation of its assets during the year ended June 30, 2022. This revaluation led to a decline in the value of assets, which has erroneously been reported as a deficit,” Mr Moriasi said.
“The fund has developed and implemented a robust Enterprise Resource Planning (ERP) platform… [which] aims to enhance operational efficiency, accountability, transparency and customer experience. In addition, it will improve employee performance, data security and accessibility of information for better service delivery,” he added.
