Zimbabwe Launches US$10 Million Youth Loan Facility
The facility was launched in response to the challenges being faced by the youth in accessing the necessary financial resources to kick-start income generating projects
WASHINGTON — Zimbabwe’s Youth, Indigenization and Economic Empowerment Minister, Patrick Zhuwao, on Wednesday launched a revolving US$10 million youth fund in Harare to help unemployed youth start income generating projects. The guest of honor at the event was Vice President Phelekezela Mphoko who hailed the facility dubbed Localized Empowerment Acceleration Facility (LEAF) as key in turning around the economy. In an exclusive interview after the launch, Zhuwao told Voice of America that the facility is a partnership between the government and the private sector. “This youth facility, that we have designed together with the Reserve Bank of Zimbabwe and the financial services sector in Zimbabwe, is for the specific purpose of kick-starting a process of restoring confidence in the youth and the financial services sector by trying to actively encourage young people that have accessed previous youth facilities to repay those facilities and as such get them back into being bankable,” said Zhuwao. The facility was launched in response to the challenges being faced by youths across the country in accessing the necessary financial resources to kick-start income generating projects as companies continue to close shop. But such programs have caused divisions between the ruling Zanu-PF and opposition parties. When a similar fund was launched during the national unity government era, then deputy Youth Minister, Tongai Matutu, representing the opposition MDC-T, said an estimated 95 percent of the loan recipients were Zanu-PF members and supporters, adding the majority of them never meant to pay back the loans or use them for empowerment projects. But Zhuwao warned defaulters under the previous Youth Minister Saviour Kasukuwere that: “There is a new Sheriff in town” who won’t stop at anything to recover all the money handed out in the past. It remains to be seen if he will live up to his word of being tough on the debtors. Zhuwao also hinted that Harare was going to introduce a Credit Reference Bill which would see defaulters ending up with bad track records, making it difficult for them to access any more loans as the country battles with surging unemployment figures. Most independent economists say Harare's unemployment is hovering around 90 percent. But the government says the unemployment rate in Zimbabwe averaged 7.76 percent from 1982 until 2014, reaching an all-time high of 11.30 percent in 2014 and a record low of 4.20 percent in 2004. However, the real level of unemployment is almost impossible to gauge as thousands of Zimbabweans are making a living in the informal sector. Seven years after Zimbabwe’s political and economic crisis peaked in 2008, the economy continues to perform poorly, with the manufacturing sector still shedding jobs and operating well below capacity hence the majority of the youth in the country are out of employment.