NAIROBI, Kenya, May 23 – The Youth Enterprise Fund has denied allegations that it has lost Sh150 million in dealings with the Kenya Union of Savings and Credit Co-operative Organizations (KUSCCO).
Youth Enterprise Fund board chairman James Gitau on Wednesday told journalists that the fund was within its mandate in all its dealings with KUSCCO.
Gitau insisted that the loan given to KUSCCO was covered by a bank guarantee from the Co-operative Bank and that the fund had also done its security checks.
“Contrary to what has been said, the loan exposure with KUSCCO as at now is covered 200 percent by a bank guarantee from the Cooperative Bank. The guarantee is for Sh300 million whilst the Fund has only released Sh150 million,” countered Gitau.
The chairman insisted that Youth Enterprise Development Fund is mandated to provide loans to existing micro-finance institutions (MFIs), registered non-governmental organisations (NGOs) involved in micro financing and SACCOs for on-lending to youth enterprises.
He said that the funds’ management sought reference from the Sacco Societies Regulatory Authority (SASRA) and only released money to the fund after it received assurances from the authority.
The partnership agreement was signed in February, 2011 with the first disbursement of Sh75 million being done in the first week of April, 2011 – seven months after the proposal was made.
Gitau argued that this delay was occasioned by the need to carry out due diligence and security perfection before drawdown.
He reiterated that the fund carried out an audit to ascertain compliance with set guidelines in previous disbursements before it before released the second tranche to KUSCCO in October, 2011.
The chairman who spoke at the fund’s offices said that KUSCCO had gone ahead to lend a considerable amount of the Sh150 million disbursed to youths and other SACCOS.
“KUSCCO has on-lent the money to individual youth and to SACCOs. These SACCOs lend the money to youth at 8 per cent interest as per the Fund’s guidelines. To date KUSCCO has lend Sh109.7 million to 13 SACCOS and Sh8,175,500 to individual youth,” said Gitau affirming that the fund is in partnership with 37 such financial intermediaries all of whom were vetted prior to disbursement of the funds.
On Tuesday the government through Youth Affairs Minister Paul Otuoma also refuted claims allegations of impropriety in the management of the Youth Enterprise Fund.
“The fund did not have the infrastructure to reach out all over the country and we had to leverage with financial intermediaries that had the infrastructure and KUSCCO applied after having fulfilled the conditions,” Otuoma explained to Parliament.
Ikolomani MP Boni Khalwale and Nominated MP Rachael Shebesh had challenged the Minister to come clear on the issue after the National Youth Council complained that the youth fund was being misused.
Otuoma told parliament that he will introduce a law seeking to entrench the fund which has so far disbursed Sh5.4 billion to 148,000 youth groups.