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State loans to youth, women dry up amid funding cuts
Thousands of youth and women have been left without funding for their businesses as budget cuts leave agencies set up to provide cheap credit unable to lend.
Thousands of youth and women have been left without funding for their businesses as budget cuts leave agencies set up to provide cheap credit unable to lend.
The budget cuts have seen at least three funds created to provide funding to youth, women and persons with disabilities (PWDs) fail to extend loans in the three months to September 2024 when the government did not provide funding, a Controller of Budget (COB) report shows.
The agencies affected are the Women Enterprise Fund, Uwezo Fund, and the Youth Enterprise Development Fund (YEDF), whose funding by the government has since stopped.
The Treasury did not release any funds for the YEDF in the quarter ending September 2024 and the lack of funding further delayed the project, which started in 2007, as the agency did not issue any loans.
At its inception, the YEDF was expected to issue Sh9.5 billion in loans by end of the programme in 2030, but just about half (Sh4.88 billion) had been issued by the end of September, just five years to the end of the programme.
“An analysis of the status of the project implementation by the State Department for Youth Affairs and Creative Economy reveals significant budgetary challenges affecting progress. Similarly, the Youth Enterprise Development Fund (YEDF) is halfway complete at 51 percent, hindered by budget issues that affect loan disbursements,”
The COB noted that the lack of funding was witnessed after the state department’s budget was slashed from Sh4.05 billion to Sh3.44 billion.
The Women Enterprise Fund, another agency set up in 2007 to help the government provide cheap loans to women groups, also had no funds during the quarter and therefore did not disburse any loans.
Seventeen years since its inception, only Sh5.6 billion (43 percent) of the planned Sh13 billion has been lent, with the COB noting the need for the State Department for Gender and Affirmative Action, under which the agency falls, to “closely monitor project implementation, address any bottlenecks, and ensure the timely and effective utilisation of resources to achieve the desired outcomes for gender empowerment and affirmative action.”
The Uwezo Fund, which was started a decade ago to provide funding to youth, women and PWD groups, also went without funding during the quarter as the State Department for Micro, Small and Medium Enterprises (MSMEs) Development budget was slashed by Sh3 billion.
“The original budgetary allocation to the State Department for MSMEs Development in ... 2024/25 amounted to Sh9.37 billion, revised to Sh6.02 billion in Supplementary Estimates I, compared to Sh13.14 billion allocated in the financial year 2023/24,” the COB report noted.
The government slashed the state department’s budget to less than half of its previous year’s budget in the first supplementary budget that came following anti-tax protests in June 2024.
Only the Financial Inclusion Fund/Hustler Fund received Sh1 billion during the quarter, which was disbursed to Kenyans and SME owners.
The government plans to lend Sh50 billion through the Hustler Fund, but only Sh12.25 billion (22.5 percent) had been advanced by the end of September.
The COB noted that during the quarter, the State Department for MSMEs Development disbursed Sh378 million in loans to support product and market development for MSMEs, Sh125.3 million to youth, women and PWD groups, and 22 million persons were accessing credit.
