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Government and banks that are disbursing the Youth Development Fund (YDF) have agreed on a new framework which compels beneficiaries to have guarantors in case of default, a cabinet minister has said.
The move comes after a huge outcry from some banks over the high rate of default.

The YDF, which is a revolving fund of over $10 million, was set up over three years ago to provide financial assistance for income generating projects for youths below the age of 35 as part of the Government’s indigenisation and economic empowerment programme.

But banks, which are disbursing the fund, chiefly CBZ and the CABS had complained of high non-performing loans under the scheme.

The two banks were not demanding collateral, and disbursement was based on project viability. The high default rate of over 78 percent had resulted in CABS suspending disbursements. But Indigenisation and Economic Empowerment Minister Francis Nhema told New Ziana it had been agreed that disbursements continue under a new formula where beneficiaries are only funded on condition they provided guarantors as a recovery back up plan.

“We have had discussions with the banks and the biggest problem was that the youths do not have collateral to access the funds,” he said.

“It has now been recommended that some guarantee be provided to ensure that the revolving fund works. Even if they do not have collateral, they must have a guarantor to make sure the youths are accountable.”

Minister Nhema said those who had defaulted were not off the hook, adding Government would not be harsh with the youths as the process was “a learning curve”.

“We have asked provincial officers to follow up on the loans and we are also helping the youth understand that it’s a revolving fund and where we have seen the projects, we have rescheduled the loan repayments,” he said.

Among the measures being implemented to recover the funds were talks with parents of those who benefited but had not paid back. – New Ziana.

“It’s a learning curve and the youths sometimes have embarked on projects that are not so economic and it is up to us to nurse them, encourage them to pay,” the minister said.

“We have not taken them to court, neither have we been harsh on them.” – New Ziana.