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By Fredrick Wanyama, School of Development & Strategic Studies, Maseno University, KENYA. YOUTH ENTREPRENEURS AND THE SOCIAL AND SOLIDARITY ECONOMY: THE CASE OF KENYA. INTRODUCTION. Large proportion of the youth is unemployed – 70% of the unemployed in Kenya are youth - PowerPoint PPT Presentation
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YOUTH ENTREPRENEURS AND THE SOCIAL AND SOLIDARITY ECONOMY: THE CASE OF KENYA
ByFredrick Wanyama,School of Development & Strategic Studies,Maseno University, KENYA.
INTRODUCTION
• Large proportion of the youth is unemployed – 70% of the unemployed in Kenya are youth
• Employment interventions have targeted “non-conventional” opportunities in areas like informal sector for self-employment
• The social and solidarity economy a key promoter of self-employment
• Comparatively smaller proportion of the youth participate in social and solidarity economy
• Less participation of youth in SSE attributed to:– The preoccupation with getting “white-collar” jobs– Lack of appreciation of the power of collective action in solving socio-
economic problems– Dependence on parents, siblings and spouses– Lack of resources to contribute to SSE activities– Single youth don’t face household challenges
• Given the little presence of the youth in SSE, can the SSE approach create employment for the youth?
• Purpose:• To illustrate how the SSE financing modalities have enabled a government-sponsored
Fund to create jobs for the youth in Kenya
YOUTH ENTERPRISE DEVELOPMENT FUND (YEDF)
• The Kenya government established the YEDF in 2006– A revolving fund for supporting the youth to start and develop
enterprises for job creation • YEDF uses financing modalities of the SSE:
– Lending to groups rather than individuals to build solidarity among the youth
– Individual borrowers have to belong to groups– Lending through financial intermediaries that are part of the SSE,
e.g. SACCOs– Spearheading the formation of youth SACCOs– Creating Credit Guarantee Schemes for young entrepreneurs
YEDF AND YOUTH EMPLOYMENT• YEDF started with KES 1 billion (US$. 11.7 million)• Government contribution is as follows:
Financial Year Amount (in KES)
2006/2007 1,000,000,000
2007/2008 725,000,000
2008/2009 499,914,170
2009/2010 540,750,000
2010/2011 550,000,000
TOTAL 3,315,664,170
• YEDF value now stands at over KES 6 billion (US$. 70.6 million)
• About half of the fund value is from repayment of loans borrowed by the youth – youth enterprises picking up?
• Funds disbursed through three schemes:– Constituency Youth Enterprise Scheme (C-YES)– Easy Youth Enterprise Scheme (E-YES)– Financial Intermediaries
• A total of KES 5.96 billion has been advanced to youth entrepreneurs through these schemes
THE C-YES• Youth group mandatory for access to C-YES• The youth group is expected to be:
– Registered for at least three months– Based in the constituency– Proposing/undertaking a business activity– Operating an active bank account
• By September 2011: – Had advanced KES 545.3 million to 12,407 youth group enterprises– Exact number of jobs created not available, but estimated at a minimum of
40,000 self-employed jobs• It has motivated the youth to embrace mutual support to seek
financial services to do business
E-YES• Builds on the gains of the C-YES • Targets individual youth entrepreneurs within groups that
successfully repay C-YES loans• Groups that successfully repay C-YES loans can also borrow
from E-YES• Individuals can borrow up to KES 100,000 and groups up to
KES 400,000• By September 2011:
– KES 54.2 million advanced to 2,111 entrepreneurs– 2,111 self-employed jobs created for the youth
FINANCIAL INTERMEDIARIES• On-lending to youth-owned enterprises through financial
institutions like banks, SACCOs, and micro finance institutions
• YEDF gives term loans to intermediaries at 1% interest • Intermediaries on-lend to youth entrepreneurs at 8%
interest• Loanable amount depend on the nature of business, but
does not exceed KES. 1 million• YEDF has partnered with 37 intermediaries that on-lend to
the youth
• By September 2011: KES 4.6 billion disbursed
• 129,385 jobs directly created for both male and female youth entrepreneurs
• 24 youth SACCOs formed to be intermediaries• In total, YEDF has created over 300,000 jobs
GENDER ENTREPRENEURS AMOUNT (KES)
Male 65,103 2,657,189,396Female 64,281 1,957,864,738TOTAL 129,385 4,615,054,135
CHALLENGES ENCOUNTERED• Inadequate disbursement and repayment
infrastructures in remote rural areas:– Difficulties in reaching the youth– Youth fail to repay loans in time
• The youth lack skills for managing their enterprises• Some members of groups leave to take up college and
wage employment opportunities• Insufficient policy and legal framework to support
growth and sustainability of youth enterprises
CONCLUSION• The SSE approach has enabled YEDF to create over
300,000 jobs for the youth in 5 years• With 4 million youth unemployed, YEDF might have
helped just 9% of the unemployed youth to find jobs• Though modest, the contribution is significant• What has accounted for the relative success?
– The availability of capital from which to borrow– Entrepreneurship training & business development services– Solidarity and mutuality among youth as a condition
LESSONS FOR SSEO• Solidarity and mutuality embedded in SSE is clearly an
asset for youth entrepreneurship• Availability of a larger capital base is critical for youth
enterprise development. SSEs should strengthen their financing mechanisms
• Improved financing need to be accompanied by entrepreneurship training and business development services
• With these remedies, SSE has the potential to create jobs for the youth
QUESTIONS• What is the experience with youth participation in the
SSE in your country?• What should be done to improve youth participation
in SSE?• How can the SSE improve its capital base to support
youth entrepreneurs?• Are the youth ready to do business?• What are the challenges facing youth entrepreneurs
in your country?