Youths fail to pay back empowerment loans: AG


Harare – In July this year President Emmerson Mnangagwa implored youths that access loans from Empower Bank to develop a culture of honouring their repayment obligations, adding that high default rates recorded under the Youth Development Fund would never be tolerated.

However, this call seems to have fallen on deaf ears as the youths continue to default as established in the latest report by the Auditor General Mildred Chiri that was tabled before Parliament on Wednesday last week.

Chiri noted that the majority of the  youths were systematically failing to pay back loans extended to them under the Youth Development and Employment Creation Fund through Empower bank.

The Empower Bank has a mandate of promoting financial inclusions through the Youth Development and Employment Creation Fund.

The purpose of the fund is to mobilise financial resources for on-lending to youth businesses, projects and youths intending to start income generating projects and business to empower and create employment for them.

Chiri however blamed the Ministry of Youth, Sports, Arts and Recreation for not being on its toes in collecting debts resulting in debtors getting relaxed.

“In my previous audit report for the year ended December 31, 2015, I made mention of the ministry’s failure to institute effective recovery action on loans. This persisted in the year 2016 as the amount of outstanding loans increased from $532 369 to $533 545. The increase can be attributed to failure by management to institute effective recovery actions resulting in a default rate by the borrowers.

“This is contrary to Treasury Institution 0501 which requires officers responsible for collecting debts to take adequate steps to collect any sums due to the Government on due date and shall on no account allow a debt to become extinguished through lapse of time,” she said.

Chiri also pointed out gross incompetence in the ministry as some vocational training centres which were created to develop skills for the youths failed to avail debt records.

“Furthermore, nine vocational centres that were visited namely Mushagashe, Magamba, Kaguvi, Tabudirira, Masvingo Urban, Nyanyadzi, Gweru Urban, Nyahoni and Shurugwi had a total of $419 181 in respect of uncollected student fees. I failed to quantify the amount outstanding at Mutare Urban VTC due to unavailability of debtor records,” she added.

Among other recommendations, Chiri said the management should take measures to ensure that the cash book is uploaded to avoid misstatement of financial statements as well as urging the management to fully implement the provisions of the amended constitution by consolidating all the activities of  Vocational Training Centres (VTCs) with Youth Development and Employment Creation Fund.

The tendency of youths not paying back loans can be traced back to 2014 when the Kurera/Ukondla Youth Fund flopped as 84 percent of beneficiaries defaulted on loan repayments since the inception of the facility in 2011.

Some youths were reported to have diverted the loans to purchasing cars while others paid lobola instead of channelling the funds to developmental projects.

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