Factors Affecting Repayment of Youth Enterprise Development Fund Loans in Coast Region, Kenya

Abstract

Youth Enterprise Development Fund was set up by the Government of Kenya to deal with the problem of youth unemployment. Kenya is dealing with a growing population and hence the need for the private sector, academia and the Government to work together to develop innovative models, industry relevant curricula and enabling business policies to address the challenges facing the youth. The functions of the fund were to provide loans to the youth start businesses, provide training opportunities and also facilitate linkages with more established businesses. Research done shows that repayment of the YEDF loans has been below average. Coast region is one of the areas that repayment has been low and there is no research done to determine the factors that have led to low repayment rates in the region. Therefore, this study investigated factors affecting repayment of YEDF loans borrowed by youth groups for six coastal counties (Lamu, Kwale, Mombasa, Taita Taveta, Kilifi and Tana River). Ordinary Least Square regression was applied to a survey data for 2013 and 2016 to estimate these factors. STATA accounting software was used to analyse the data. The results indicate that education, age and gender of the youth group members affect loan repayment rates. The study recommended capacity building for the beneficiary groups as well as thorough screening of the loan applicants to address this challenge