YOUTH ENTREPRENEURS AND THE
SOCIAL AND SOLIDARITY ECONOMY:
THE CASE OF KENYA
By
Fredrick 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 “nonconventional” 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 governmentsponsored 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 onlend to the youth
• By September 2011: KES 4.6 billion disbursed
GENDER
ENTREPRENEURS
AMOUNT (KES)
Male
65,103
2,657,189,396
Female
64,281
1,957,864,738
TOTAL
129,385
4,615,054,135
• 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
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?
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The Case of Kenya - English (SSEA2013)