Thousands of youth and women are now lacking funding for their businesses as budget cuts leave agencies created to provide cheap credit without funding and unable to extend loans.
The budget cuts have seen at least three funds fail to provide loans in the three months to end of September 2024 when the government did not provide any funding, shows a report by the Controller of Budget (CoB).
Affected agencies are the Women Enterprise Fund, Uwezo Fund, Youth Enterprise Development Fund (YEDF) and the Hustler Fund.
The National Treasury did not release any funding for the YEDF during the quarter ending September 2024. At inception in 2007, YEDF was expected to extend Sh9.5 billion loans until when the programme ends 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 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, also created in 2007 to help the government extend cheap loans to women groups, also had no funding during the quarter.
Seventeen years since its inception, only Sh5.6 billion (43 percent) of the planned Sh13 billion has been loaned out, with the CoB noting the need 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, started a decade ago to provide funding to youth, women and disable people groups also went without funding as the state department for Micro, Small and Medium Enterprises (MSMEs) 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 was funded Sh1 billion during the quarter which was loaned out to Kenyans and SME owners.
The government plans to loan out Sh50 billion through the Hustler Fund, but just Sh12.25 billion (22.5 percent) had been loaned out by the end of September.
The COB noted that during the quarter, the state department for MSMEs Development disbursed Sh378 million loans to support product and market development for MSMEs, Sh125.3 million to Youth, Women and PWD groups and that 22 million persons were accessing credit.
