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YOUTH ENTREPRENEURS AND THE SOCIAL AND SOLIDARITY ECONOMY: THE CASE OF KENYA By Fredrick Wanyama, School of Development & Strategic Studies, Maseno University,

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Presentation on theme: "YOUTH ENTREPRENEURS AND THE SOCIAL AND SOLIDARITY ECONOMY: THE CASE OF KENYA By Fredrick Wanyama, School of Development & Strategic Studies, Maseno University,"— Presentation transcript:

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2 YOUTH ENTREPRENEURS AND THE SOCIAL AND SOLIDARITY ECONOMY: THE CASE OF KENYA By Fredrick Wanyama, School of Development & Strategic Studies, Maseno University, KENYA.

3 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

4 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

5 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

6 YEDF AND YOUTH EMPLOYMENT YEDF started with KES 1 billion (US$ million) Government contribution is as follows: Financial YearAmount (in KES) 2006/20071,000,000, / ,000, / ,914, / ,750, / ,000,000 TOTAL3,315,664,170

7 YEDF value now stands at over KES 6 billion (US$ 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

8 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 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

9 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

10 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

11 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 GENDERENTREPRENEURSAMOUNT (KES) Male65,1032,657,189,396 Female64,2811,957,864,738 TOTAL129,3854,615,054,135

12 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

13 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

14 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

15 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?


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