Will the Uwezo Fund succeed where past projects have failed?

The Sh6 billion Uwezo Fund launched by President Uhuru Kenyatta recently is the latest government bid to uplift women and youth through enterprise.

But a quick look at the past raises questions about the thinking behind Uwezo and how different it will be from the previous ones that were marred by mismanagement and debts.

The Youth Enterprise Development Fund and the Women’s Economic Empowerment Fund that have been lending to their target groups for the past six years have little to show for it. Many say the two have had little impact despite receiving a combined total of Sh12.5 billion to date.

Launching Uwezo Fund at the University of Nairobi, the President said it targets women and youth groups who want to venture into businesses.

But Mr Kenyatta also sought to present the fund as a different idea. “We are not merely launching a fund, or disbursing money. We are incubating enterprise. We are catalysing innovation. We are promoting industry. We are employing the youth. And we are growing the economy,” he said.

But it is feared that the haste in Uwezo without proper research as well as overlaps with the existing funds could jeopardise it end up like the defunct Kazi Kwa Vijana.
“How different is it from the rest?” asked Mars Group director Mwalimu Mati.

Critics see these as reactive political gifts haphazardly thurst to entice the youth and women, exposing them to abuse by unscrupulous managers.

The Youth Fund was rocked by a Sh300 million scandal in 2009, until the anti-corruption commission investigated a contentious deal the fund had entered with Enablis Entrepreneurial Network.

Two audit reports released last year – one by the Efficiency Monitoring Unit and another by an independent management consultant hired by the fund – noted that the board was too involved in the day to day activities of the fund.

The efficiency unit report recommended disbanding the board of directors, claiming it had failed in its oversight mandate, resulting in gross cash mismanagement.

The World Bank-funded Kazi Kwa Vijana co-ordinated by the Prime Minister’s office also suffered a catastrophy. It was cancelled in 2011 after just two years amid claims of funds misappropriation.

But State House spokesman Manoah Esipisu played down fears of overlap, saying: “They are not configured in the same manner. The women and youth funds will continue to exist as revolving funds.”

Youth Fund chief executive Catherine Namuye also says Uwezo will complement their work.

COMPLEMENTS OUR WORK

“Uwezo and youth funds are not competitors. They will complement each other,” she said.

The official said a youth group will be able to borrow from more than one fund as long as they are credit-worthy.

“Borrowing from several institutions is not a crime. What counts is ability to repay. The three funds will share information on borrowers,” she added.

The existing youth and women’s funds, initiated by President Mwai Kibaki, operate Sh4.8 billion and Sh2.5 billion respectively; the defunct Kazi kwa Vijana had Sh5.2 billion.

This brings to Sh12.5 billion the total amount of money put at the disposal of women and youth in the last seven years.

But many young people continue to languish in abject poverty. And the President knows it.

“As we speak, 70 per cent of unemployed people in Kenya are youth. This is an unacceptably high number given that 30.3 per cent of our population is classified as youth,” Mr Kenyatta said at the launch of Uwezo.

The World Bank also estimates that each year Kenya releases some 800,000 young people into the job market and only 50,000 secure white collar jobs.

So far, the women’s fund has received Sh2.5 billion from the public coffers out of which it has created loans worth Sh3.1 billion.

Its September 15 report shows that it has 626,400 women borrowers while 224,440 women have been trained in entrepreneurship and business management skills. A further 9,432 women have been encouraged to form saccos and 15 women-owned saccos have been registered. The number of groups funded are 24,478.

The youth fund received Sh4.8 million from the Treasury and has created loans worth Sh8 billion lent to over 210,000 youth-owned enterprises.

“The amount lent may appear more than the amount received from the Treasury because the fund is revolving,” said Ms Namuye.

A revolving fund gives out loans to be rapaid at a profit and then lent out again.

The youth and women’s funds have had to contend with defaulters.

“The amount we lend, through intermediaries, has a repayment rate of 98 per cent while the moneyh lent directly to the youth has a repayment rate of over 70 per cent,” said Ms Namuye.

“If we were as strict as banks, the repayment would probably be 100 per cent. However, that would mean we cannot justify our existence if we were not any different from banks.”

The women’s fund has loan repayments of 91 per cent for the self-help groups and 99 per cent for the nancial partners.

Some critics now warn that Uwezo is not a panacea for youth problems.

Mr Boniface Ngahu, the marketing director of SBO Research, on Tuesday wrote in the Business Daily: “You cannot achieve different results by doing the same thing that you have always done.”

The writer was alluding to President Kenyatta’s statement at the launch calling on public workers to change their mindset so the fund can succeed.

Mr Mati fears Uwezo may well be sabotaged by greedy managers out to enrich themselves. “But were the managers selected in a democratic and all inclusive process?”