By Kundai Marunya
Youth in entrepreneurs are failing to access loans to scale up or start-up their businesses due to lack of collateral security, a prerequisite for many micro financiers.
The problem has seen many businesses by young people failing to realise their full potential, some even folding. Addressing the Livelihoods Programs Conference this morning, Restless Development (organisers of the conference) head of operation Farai Muronzi said, “The need for collateral security to access loans for young people has been a big challenge.”
Muronzi said the fact that institutions that extend loans have increased has not been of much help to the young people who have not worked long enough to have property that can act as collateral security. “There has been an increase of institution that gives loans but collateral security has hindered scaling up of projects and starting up of new projects by youth.”
As a solution Restless Development is working with financial institution to make them understand how some projects being done by youth people, farming involved work, so as to make life easier for young entrepreneurs. “There is a need for players in young livelihoods to work on policies that cater for young people to do away with collateral security,” said Muronzi.
The risk of not having collateral security was however brought to light by Zimbabwe Youth Council director Livingston Dzikira. “Our Youth Fund failed because we have a young people that think because it is a government fund they are entitled to it. They thinks it’s ok not to pay back what they borrow.”
Dzikira said some youth failed to pay back what they owe because of genuine failures of their projects. “Those who have genuine reasons should come forward and talk to the bank to work out a payment plan or request further funding to make their investment a success. They don’t have to hide, change their contact details so as to avoid us,” he said. “They are however those who think they cannot pay because they have political connections, which is very wrong. It is because of their selfishness that now we can’t avail funds to help other people in dire need of those funds.”
Dzikira said he was enticed to name the beneficiaries of the Youth Fund ad are withholding payment while with a capacity to pay back what they owe. “I am not able to name them because the bank said it infringes the client bank privilege.”