GOVERNMENT has tightened its screws on a new US$10 million loan facility for youth start up projects after a high defaults registered in an initial facility drove nonperforming loans for the country’s largest mortgage lender.
The building society arm of insurance giant Old Mutual, Central African Building Society (Cabs) last year suspended disbursements from its US$10 million Youth Fund after defaults rose to 78% in June.
The fund was established three years ago after Old Mutual Zimbabwe Limited (OMZL) donated 2,5% of its issued share capital – equivalent to US$10 million – to a trust aimed at empowering youths.
Speaking on the sidelines of a new fund named Localised Empowerment Acceleration Facility (Leaf) in the capital, Reserve Bank of Zimbabwe deputy governor Kupukile Mlambo said government is negotiating with local commercial banks to grow the pool of funds for on-lending to youth development projects.
The new fund seeks to ease unemployment levels.
“Leaf will therefore be implemented in all parliamentary constituencies of the country and in the wards within the constituencies. It will begin by engaging those young people who have successfully paid back their loans to the Development and Employment Creation Fund,” said Vice President Phelekezela Mphoko in a speech read on his behalf.
“The objective is that these financially disciplined people will effectively unlock funding for other young people but upon the foundation of financial discipline and a culture of paying back loans advanced.”
Independent estimates indicate that nearly 90% of economically active Zimbabweans are employed in the informal sector as the country slides to deindustrialisation.-Staff Writer