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GOVERNMENT INJECTS E20 MILLION TO YOUTH ENTERPRISE REVOLVING FUND

By Hlengiwe Ndlovu | 2018-07-19

GOVERNMENT has pumped in E20 million to the revamped Youth Enterprise Revolving Fund (YERF) which was disbanded in 2016 following serious embezzlement and mismanagement of funds.

The E20 million will be used to loan young people as they start or expand their businesses.

Speaking in a stakeholders’ forum held over a breakfast session at the Mountain Inn yesterday, Minister of Sports, Culture and Youth Affairs David Ngcamphalala made it clear that the E20 million is not grant money, but would be used only for loans which would be given out to youth-owned business ventures.

Fund Manager Bhekizwe Maziya defined young people as those between the ages of 18 and 35. The stakeholders’ forum was attended by representatives from different institutions which YERF has established a working relationship with, as well as those with vested interests in youth entrepreneurship matters.

Also participating in this forum was South African National Youth Development Agency (NYDA) Senior Operations Manager Siyabonga Mbambo, who shared his country’s experiences with youth funding initiatives. He began his presentation by cautioning the YERF against regarding money as the solution to youth poverty and unemployment problems because it is not.

“Without will-power and ambition, money actually does not solve any of the problems faced by the youth,” Mbambo said, making an example of how not a single young South African had accessed funding from a E2.7 billion facility set up by the Industrial Development Corporation (IDC) and the Small Enterprise Funding Agency to fund youth owned businesses.

“No single young person has accessed the E2.7 billion fund, simply because they don’t have the skill to handle this kind of money and they also submit business plans that don’t make sense,” he said, matter-of-factly. Mbambo repeatedly encouraged the YERF to aggressively market itself so that the target market, which is the youth, is well-acquainted with its product offering and services.

“If young people don’t know about what the YERF does, you’ll find yourselves sitting with all this money and not helping young people in any way,” he advised.

Mbambo also challenged the YERF to come up with innovative ways of dealing with young people’s collateral challenges because they often do not have it. In another matter, he appealed to the YERF to make its lending rates lower than those charged by commercial banks.

“The Youth Enterprise Fund must bear in mind that they are dealing with a risky client which can not necessarily go to a commercial bank for funding, hence its mandate is to address a market failure gap. The pricing of loans is, therefore, important because the youth fund cannot price its loans above the banks. If the fund prices above banks, it is not addressing the problems faced by young people but compounding them,” he said.

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