Youth Fund restructures Sh31.2m loans over coronavirus restrictions

The Youth Enterprise Development Fund (YEF) has restructured Sh31.2 million loans, equivalent to about 9.5 percent of its net lending at the end of last year, in a move to cushion youth-owned enterprises from the impact of Covid-19 pandemic.

YEF has offered repayment breaks of up to three months based on a case-by-case basis, as beneficiaries hit by cash flow hitches seek flexible terms.

The fund, established in 2006 to provide loans for youth-owned businesses follows in the footsteps of commercial banks that have disclosed the impact of the health crisis on their loan books after the Central Bank of Kenya (CBK) loosened the loan repayment rules last month.

More than Sh300 billion loans have been restructured by Kenyan financial institutions in efforts to cushion customers due to thin business.

“The YEF has restructured loans worth Sh31.2 million in the last three weeks. This will offer the much needed relief to businesses owned by youth during this trying moment,” YEF acting chief executive Benson Muthendi told the Business Daily on Thursday.

“We are restructuring these loans to keep businesses owned by young people alive. We are certain that for many businesses, once the supply chain is restored, they will go back to business.”

The CBK recently said more than 75 percent of Kenyan small businesses faced collapse under the threats of the disease that has brought the world to standstill.

The World Bank expects Kenya’s economic growth to slow down to 1.5 percent this year or contract one percent in the worst-case scenario as the virus saps demand from trading partners like Europe as well as disrupt supply chains and domestic production.

This has led to layoffs, reduced cash flow for businesses and forced unpaid leaves, setting the stage for loan defaults.

YEF did not comment on the potential impact of the loan restructuring on its earnings this year.

Between January to March 2019, the fund had disbursed Sh86.6 million, benefiting 10,150 youths across the country.

The disbursement in a similar period this year went up 24 percent to hit Sh 107.64 million, covering 11,900 people.