Friday, 25 August 2017

UNPAID YOUTH LOANS : ZHUWAO BLAMES BANKS

THE Government has blamed financial institutions for high default rates in repaying the Youth Development Fund (YDF) loans saying there were sloppy in vetting beneficiaries.

It is not clear how much the financial institutions such as CABS, CBZ, the now-defunct Allied Bank, and Infrastructure Development Bank of Zimbabwe lost in allocating loans to youths but the money runs into millions of dollars.

In an interview yesterday, the Minister of Youth, Indigenisation and Economic Empowerment Cde Patrick Zhuwao said banks who rolled out the funds were giving out the loans without vetting the capacity of beneficiaries in repaying the money.

Cde Zhuwao said the banks were dishing out up to $3 000 to youths.
Some of the youths are alleged to have diverted their loan allocations to buying personal luxuries.

Cde Zhuwao said the Government will not account for abused funds as it did not have a direct relationship with the beneficiaries who ended up defaulting.

“The relationship is between the bank and the particular individuals. Our relationship is between Government and the financial services institutions. Now the financial services institutions are running away from us because a lot of them did not do their due diligence. 

They have what is referred to as ‘know your customer requirements.’ Some of them did not do that,” he said.

Cde Zhuwao said it was worrying that the high default rate had created a wrong impression that youths are not dependable with loan facilities.
“It becomes rather unfortunate, because these financial institutions should have been more serious. Because what it then does is tarnish all young people and the narrative that then goes out is that the young people are not bankable,” said Cde Zhuwao.

“But that is not true. This economy is being run by young people. We need to recognise that and demonstrate that young people not only have the capacity to run this economy but also have the capacity to be bankable.”

He said the Government will be stricter in vetting individuals seeking loans when it rolls out funds from the coming Youth Bank.

Cde Zhuwao said vetting will be done at local level as people at grassroots level will be tasked to identify those who should allocated the funds.

“One of the things that we want to do to ensure that this is more sustainable is that we want to engage with a young person within their local community.

So you cannot turn around and say somebody for example from Pumula has to go to Harare and somebody from Harare should be vetting their application.

“It has to be done at the local level because it’s only at the local level that you realise that the person you are dealing with is a credible business person  or the person you are dealing with is not serious.” Chronicle 

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