Loan Default and Performance of Youth Enterprise Development Fund in Dagoretti South Constituency, Nairobi County, Kenya.
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Date
2018
Authors
Jagongo, Ambrose
Aberi, Aming’a Vincent
Journal Title
Journal ISSN
Volume Title
Publisher
International Academic Journals
Abstract
Credit which is channeled into productive
use yield good returns whereas the
performance of the lender is gauged on the
amount of loans disbursed, performing loans
and non-performing loans. A majority of the
beneficiaries of government initiated credits
have had a bad history in loan repayment in
that they deem the credit as a grant that
should not be repaid. Government
institutions (YEDF included) offering credit
facilities have had a poor loan performance
in that the process of obtaining the credit is
tedious making the rate of loan up take to be
low, the amount of loan offered is
substantially low and while those who have
managed to access the loan funds have
decided to default. This study sought to
determine the relationship between credit
default among the youth beneficiaries of the
youth enterprise development fund and the
performance of the fund in Dagoretti
constituency. The main objective of the
study was to establish the effect of credit
default on the performance of the Youth
Enterprise Development Fund in Dagoretti
constituency. Business development services
like trainings to youth groups, diversion of
loaned funds to other projects against the
intended proposed projects, borrowers’
characteristics and business failure
constituted the independent variables the
study concentrated on while the dependent
variable was the performance of the Youth
Enterprise Development Fund in Dagoretti
Constituency, Kenya. Loan performance
was measured by investigating the rate of
loan repayment, amount repaid and the rate
of defaulted the loans. The research
methodology that was be employed was of
descriptive survey design and the population
of the study was selected through random
sampling from 124 youth groups that have
benefited from the fund and the 2 YEDF
officers in Dagoretti Constituency. Data was
collected through oral face to face
interviews and using questionnaires with
both open ended and closed questions. The
questionnaires adopted a five point Likert
scale which ranges from strongly agree to
strongly disagree. Data then was edited for
accuracy, uniformity, consistency,
completeness and arranged to enable coding
and tabulation for final analysis. The study
adopted multiple linear regressions to
analyze the data. The study established that
there was a significant relationship between
study variables. Poor business performance,
domestic problems and illiteracy were the
main factors that led to diversion of the
borrowed funds by the youths. This led to
loan defaults and business failure. The study
concluded that there is need to train the
beneficiaries on how well to utilize the
funds and also thorough vetting to be done
to the applicants before loan disbursement.
The need sensitize youths on own savings
and financial management skills might
mitigate the risk of failure to repay loans.
Description
Research article
Keywords
Loan default and performance, Youth enterprise development fund, Dagoretti South Constituency, Nairobi County, Kenya
Citation
Aberi, A. V. & Jagongo, A. (2018). Loan default and performance of youth enterprise development fund in Dagoretti South Constituency, Nairobi County, Kenya. International Academic Journal of Economics and Finance, 3(2), 1-20