4 July 2014
Due to high rates of default to paying back funds loaned to youths under the Youth Development Fund administered by Central African Building Society (CABS), the latter has suspended the facility. The last payments to beneficiaries under this facility were made in May 2014. The $10m fund had been provided by Old Mutual in line with the indigenization and empowerment laws
In a report to the Portfolio Committee on Youth, Indigenization and Economic Empowerment a company representative of Old Mutual, who are the parent company of CABS, reported that the default rate was as much as 78%.
The statistics provided by CABS are as follows:-
· Targeted age group: 18 to 35 years.
· No. of applications received: 22 000.
· No. of projects funded: 3 600
· Funds disbursed: $5 million
In a related report, CBZ reported to the same Portfolio Committee that they had paid out $2.3million to beneficiaries and the default rate on their portfolio was 45%.
The main observations for the poor performance were cited as follows:-
· The main poor performing areas were poultry business, cross border and manufacturing.
· Lack of business management skills.
· Reluctance to pay back.
CABS hinted on having the funds linked to beneficiaries who have undergone vocational training.
The Herald, “CABS suspends youth loan scheme”, viewed 4 July 2014, http://www.herald.co.zw/cabs-suspends-youth-loan-scheme/
