Kenya’s Youth Enterprise Development Fund (YEDF), a key initiative meant to empower young entrepreneurs, is under scrutiny after an audit by Auditor-General Nancy Gathungu revealed that over Sh2.5 billion in loans may never be recovered.
The findings, covering the financial period ending June 30, 2023, cast doubt on the fund’s accountability and debt management practices.
The audit highlights that six loan categories, amounting to Sh2,463,644,828, have remained unpaid for more than three years.
These loans, disbursed to youth groups for start-up ventures, are part of the over Sh14.2 billion the YEDF has allocated since its inception to support approximately two million young people across the country.
Despite the fund’s noble mission, the lack of repayments underscores deep-seated challenges in debt recovery and portfolio management.
Gathungu’s report also points out that the fund allocated only Sh395 million to cater for bad and doubtful debts, a figure deemed insufficient given the scale of outstanding loans.
The report raises concerns over the YEDF’s failure to put effective mechanisms in place to recover these long-overdue loans.
“The management has yet to explain what steps are being taken to recover these debts, raising questions about the fund’s financial health and accountability,” the Auditor-General noted.
A troubling aspect of the audit is the revelation that Sh66 million in loan repayments remains unallocated due to unidentified borrowers.
This issue, which persists despite being flagged in previous audits, suggests laxity in account reconciliation and tracking.
“Management did not explain why reconciliations were not done to update and allocate borrowers’ accounts. This could lead to a misstatement of receivables,” Gathungu observed.
The audit also revisits the controversial payment of Sh180 million to a private company for an ICT contract.
This payment, flagged as irregular, was tied to senior YEDF officials implicated in corruption.
Despite investigations and convictions related to the misuse of these funds, no provision has been made to recover the amount.
Gathungu expressed skepticism about the recoverability of the Sh180 million, noting that the fund failed to make necessary provisions for bad debts in this instance.
The revelations raise critical questions about the fund’s operations and its ability to fulfill its mandate.
Established to provide financial support to young entrepreneurs, the YEDF’s struggles with loan recovery and internal accountability threaten its credibility and sustainability.
The Auditor-General’s findings highlight systemic issues, including poor loan portfolio management, weak internal controls, and insufficient provisions for bad debts.
These shortcomings not only undermine the fund’s objectives but also point to the potential mismanagement of public resources.
