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Dumisani Nsingo, Senior Business Reporter
OLD Mutual has committed itself to continue extending loans under its Kurera-Ukondla Youth Fund facility despite the huge default rate that has characterised the scheme since its inception about five years ago.
The Kurera-Ukondla Youth Fund was established on 16 November 2011 as part of Old Mutual’s indigenisation agreement with the Government.
About US$10 million was allocated to the youths, in an effort to improve levels of unemployment and act as a stimulus to economic growth in the country.
The fund, which was administered and managed by CABS saw at least 97 percent of the youths who accessed loans in 2011 failing to service them.
However, Old Mutual group executive officer Mr Jonas Mushosho said despite the high default rate the Youth Fund experienced, the integrated financial services institution was going to revive the facility as it played a pivotal role in turning around the country’s economy.
“By setting up a Youth Fund you are providing an alternative channel by which youths can realise their aspirations, so that they are able to set up projects or businesses that can make them self-employed and employ others and in the process increase production in the country. In fact if you look at some of the projects that have been done under this programme they (projects) have achieved that objective. They have been a great success,” Mr Mushosho said.
He said Old Mutual was in consultation with the Government to rectify and map the way forward with regards to dealing with the issue of non-payment of loans by the youth further stating that once an agreement was reached, the financial institution would reopen the youth funding facility.
“We have had some serious constraints in respect of getting those loans to perform at the level that you would ordinarily expect in a banking institution and as a result of those difficulties both the Government and ourselves have been looking at ways at which we can unblock those constraints. Once we have completed that exercise we would like to continue with the provision of funding under the Youth Fund.
“Across the entire economic sectors there is a problem of repayment of loans due to the current economic conditions. So to just pick on the Youth Fund and forget what is happening to the rest of the industry is not fair. If the rest of the industry is struggling I will not be surprised that the Youth Fund is struggling . . . ,” Mr Mushosho said.
Late last year Government launched a revolving $10 million youth fund, the Localized Empowerment Acceleration Facility.
The facility was launched in response to the challenges being faced by youths across the country in accessing the necessary financial resources to kick-start income generating projects as companies continue to close shop.
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