Influence of Youth Enterprise Development Fund on the Performance of Youth-run Businesses in Bumula Sub County, Bungoma County

Abstract

Youth-Run-Enterprises (YRBs) are defined as businesses owned and run by people aged below 35 years. The performance of such enterprises continues to attract a lot of policy and scholarly attention. However, empirical evidence on the determinants of performance of youth run enterprises is limited. This limits policy initiatives aimed at improving the performance of youth run enterprises. This study was conducted to assess the influence of Youth Enterprise Development Fund (YEDF) on the performance of Youth-run Enterprises (YRBs) in Bumula District, Bungoma County, Kenya. The objectives of the study were to determine the influence of access to credit, to establish the influence of capacity building, to examine the influence of market dynamics and to investigate the influence of monitoring and evaluation on the performance of youth-run enterprises in Bumula District. The study employed a cross-sectional survey design. The target population for the study was 2,800 youths belonging to 140 youth groups. The sample size was computed using Gay’s formula where a sample of 280 respondents was deemed adequate for the study. The respondents were selected using simple random and purposive sampling. Data was collected using structured questionnaires administered to the respondents. Data was analyzed using Statistical Package for Social Scientists (SPSS) version 17 and presented in frequency, percentage tables and means calculated. The study found out that despite the fact that YEDF could be a preferred source of funding among the youths, accessing it remained a great challenge. It was also discovered that time taken to process loan applications is very long; the speed of processing applications is not satisfactory thus all planned activities are jeopardized. Most youth have not been properly informed on how this fund can be accessed. The majority of the respondents at 67.4% felt that the interest rate is not favourable for the YRBs to thrive. High interest rates present a big challenge for entrepreneurs who to access credit due to uncertainties experienced while running businesses and enterprises. The loan amount offered by YEDF is limited and youth groups are required to restrict their budgets within the upper limits. This means that the YRBs cannot make great plans and ventures. New initiatives cannot take place due to limited funds. Time period given before repayment, also referred to as ‘grace period’ is not adequate. The majority of the youth officials indicated the period was not very adequate with 70.4% observing that time or period provided to loanees before commencing loan repayment is important especially to the newly established enterprises. The study found out that despite the fact that YEDF could be a preferred source of funding among the youths, accessing it remained a great challenge. Most youth have not been properly informed on how this fund can be accessed and at the same time, projects funded by the funds have not been properly managed and hence low repayment rates. It can be deduced that majority of the respondents have little knowledge on developing business plans and this affects the performance of the YRBs. Majority of youth groups try to develop business plans, which is a challenge to many people. There is need for promoting networking among various institutions working in the area of promoting Youth Enterprise Development Fund. This networking should be based on a careful consideration of the competencies and capacities of participating partners. 46.0% closely associated the support with the performance of YRBs indicating that support from stakeholders is minimal. It can be concluded that routine visits by fund officers has an effect on the performance of the YRBs with 57.3%. Fund Officers rarely visit funded groups to assess their progress. Majority of the respondents felt regular progress assessments by the Fund Officers was key towards ensuring that proper guidance and technical support would be given on time when necessary Projects funded by the funds have not been properly managed and hence low repayment rates. The fund has staffing problem and hence lacks proper monitoring and capacity building. The fund has not been able to address gender imbalances and has not made significant impact in society. The study findings indicated that access to credit and financing, capacity building and access to markets are key drivers of the performance of YRBs. The study recommends that more attention should be given to the current challenges affecting youth such drug abuse and the education system should prepare the youths to embrace entrepreneurship over the ever shrinking white collar jobs. Young people’s development is dependent on a range of supports and opportunities from the family, community, the school, the church and other institutions that touch them. Thus, a major challenge for policy makers is to situate youth enterprise and other employment policies into a comprehensive employment framework which encompasses a wide range of issues, especially education, training, labour market, enterprise development and social (including poverty reduction) policies. This means that youth policies should be properly integrated with broader economic and development policies.