A boost for Lim’s young entrepreneurs

THE National Youth Development Agency (NYDA) is going to make more money available for survivalist micro firms with the help of outside agencies.

This emerged during the Limpopo launch of a partnership between the Industrial Development Corporation (IDC), the Small Enterprise Finance Agency (Sefa) and the NYDA, which was held at Meropa Casino and Entertainment World recently.

IDC and Sefa have made R2,7 billion in loans available to young entrepreneurs over the next five years, offering a solution to NYDA’s lending problems.

This funding means that R540 million a year will be made available to young entrepreneurs. This is 15 times the R36,7 million in finance that NYDA approved in 2011/12.

NYDA’s board took a decision in May this year that the agency will no longer give out loans. Instead, it will now offer grants of between R1 000 and R100 000 to survivalist micro firms.

Since its establishment in 2009, NYDA has struggled to collect outstanding loans with defaults soaring to 47% in 2011/12.

NYDA’s chief executive, Steven Ngubeni, says the increasing default rate down is also due to a number of borrowers who are reluctant to pay.

“Some young people that we have funded are not paying, simply because they feel entitled to the funds as it is provided by government,” says Ngubeni.

NYDA’s predecessor, the Umsobomvu Youth Fund (UYF) merged with the National Youth Commission which formed NYDA.

The UYF’s loan book recorded a 12,1% default rate for 2008/9.

Since last year March 31, default percentage ratings had climbed to 47% of NYDA’s R343,9 million book value in loans, which is according to NYDA’s 2011/12 annual report. NYDA had previously offered up to R5 million in loans.

NYDA’s chairperson, Yershen Pillay, who was appointed in March this year, says the agency will complement the loan finance offered from the IDC and Sefa with business support and mentorship.

This move by NYDA’s board was informed by the need to restore the agency’s credibility, fending off criticism that it wasted millions of rands on hosting several youth conferences without really benefiting young entrepreneurs.

The minister of performance monitoring and evaluation, Collins Chabane, revealed in April in a parliamentary reply that of the R7,1 million in finance that NYDA had advanced as micro business loans in 2011/12, R3,8 million is deemed irretrievable. A further R1,4 million had not been paid yet by loaners.

Entrepreneurs between the ages of 18 and 35 who truly want to start their own business can apply for finance from NYDA, IDC or Sefa.