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.
Publisher
University of Nairobi