Kampala — Thousands of jobless youth around the country will be happy to learn that the government is finally ready to roll-out its long drawn-out plans to provide soft loans for small business start-ups.
Finance Minister Maria Kiwanuka yesterday said agreements have been reached with three commercial banks to fix the interest rate to be charged on youth money at 15 per cent for a period of six months from today.
Ms Kiwanuka said this at the ministry headquarters where she officially signed Memoranda of Understanding with Centenary Bank, dfcu and Stanbic chief executives in a partnership deal that potentially paves way for unemployed youth to access the Shs25b venture capital announced in the 2011/12 Budget.
"The fund has been set up with resources contributed by government in partnership with KFW totalling Shs12.5 billion and an additional equal amount which has been mobilised by the participating banks," Ms Kiwanuka said in a statement. "To ensure that the fund grows and is effectively rolled out to achieve wider coverage we need to prudently manage it and allow our partners to remain accountable to their shareholders."
In the 2011/12 budget, the government announced the Youth Entrepreneurship Venture Capital Fund to help jobless youth. However, halfway into the financial year, the youth have not yet received the money, prompting some youth representatives in Parliament to threaten a nude demo.
The fund will focus on improving competitiveness of the business environment to enable the private sector play a dominant role for employment generation, which will be enforced by vocational training, Ms Kiwanuha said.
While there were reports that the government was not contributing any money to the fund, the Deputy Secretary to the Treasury Keith Muhakanizi said: "The money from the KFW is government money. This money was a grant from Germany paid to microfinance institutions in the country and they paid back the money to government."
The minister revealed that the fund will target start-up businesses and Small to Medium Size Enterprises (SMSEs) and it will address existing shortcomings which hinder funding of the lower end of this business segment.
"It will be used to support viable and sustainable SMSEs across the country because they comprise over 90 per cent of the private sector; they contribute to employment creation, provision of basic goods and services and the generation of tax revenues," said Ms Kiwanuka.
The chief executives of the banks committed to make the roll-out is successful.
"We have agreed to a fixed interest rate of 15 per cent until July when it shall be reviewed and all our charges and loan management fees have been capped at 1 per cent fees," affirmed dfcu chief executive officer Juma Kisaame.
Mr Kisaame added: "Dedicated desks and personnel will be set up within our banking halls and we are planning on availing information flyers to make the process easy. The banks conduct tailored money/business management clinics which we are willing to put at the disposal of the youth."