Fund vows to create loan funding for young people
The Umsobomvu Youth Fund (UYF) has promised to create loan funding for 100000 young people by 2010, it revealed at the launch of its new microfinance strategy last week.
"One of the things that started to concern us was that in 1998 there were 200000 enterprise microfinance cli-ents in South Africa and that number was falling rapidly," said UYF chief executive Malose Kekana. "Towards 2006 that number had dropped to 130000."
UYF microfinance manager Stephen Mirero said that the key to the success of the programme was to consolidate existing systems and expand on them. The fund, which was formed in 2001 to help young entrepreneurs with funding and business capacity development, currently has nine microfinance contact centres around the country and aims to boost that number to 15 within the next three years.
"We have looked at similar projects around the world and we have noticed that it does not help to subsidise credit," said Mirero. "The money usually just goes to the wrong people (those with information), and the providers find it impossible to remain sustainable. If you close shop, how can you provide support to a client?"
UYF director of service delivery director JJ Oosthuysen said that the programme would be different because it would be easier for customers to apply and process loans. "There won't be such a rigorous due diligence process for loan applications," he noted.