Factors influencing youth enterprise development fund loan repayment among youth in Kenya: a case study of Konoin constituency Bomet county

Abstract

Despite the continued increase in financial support to youth enterprises by the government and other development agents, there is still failure and high collapse rate of youth projects in Kenya. The YEDF loan repayment level in Kenya is low and its default rate is 33.3%. The purpose of this study was to establish the factors influencing the repayment of youth enterprise development fund (YEDF) loan among funded youth groups in Konoin Constituency. This study reviewed relevant literature on Micro enterprise funds and factors influencing loan repayment performance which included the business factors, loan factors and the group dynamics. The study adopted a descriptive research design. All the 221 funded youth groups in Konoin constituency formed the target population. Cluster sampling and random sampling techniques were applied to select 134 youth. Questionnaires were used to collect the data. The data collected was analyzed using descriptive analysis technique using SPSS. A multiple regression model was used to determine whether there is relationship between loan factors, business factor and group dynamics on the YEDF loan repayment. The findings were presented using charts, tables, percentages, frequencies and mean scores. The study results indicated that loan factors were significant in explaining loan repayment(B=0.214; p<0.05). Loan factors influencing loan repayment to a very great extent included training on the usage of loan, loan access procedures, loan supervision, loan diversion, and loan size. The study also established that business factors significantly influenced YED Floan repayment performance (B=0.282; p<0.05). Poor proceeds from the business, business experience, and location of the business, inadequate capital, and nature of business, age of the business and size of the business were the majors that had a significant effect on loan repayment. The study results revealed that group dynamics significantly influence YEDF loan repayment (B=0.353; p<0.05). Group factors affecting loan repayment significantly included lack of trust among members, attitude of members and officials, group internal rules and regulations, peer pressure, group formation, group size and group family composition. The following recommendations were made. First, the youth that are advanced loans should be trained on basic financial management and business planning skills. Moreover, the government should supervise and monitor the businesses that benefit from the loans.Secondly, the national and county governments should have business and youth support centers where the youth that are starting small businesses are mentored and developed.Lastly, youth should improve their skills and have an impetus of risk taking.