Phikwe Youth business on the RED

15 Jul 2019

BY BONNIE MODIAKGOTLA

The closure of the BCL mine has led to youth funded projects collapsing, with the remaining start-ups struggling to meet loan repayments, revealed government on Tuesday.

Philip Makgalemele, junior minister at Youth Empowerment, Sport and Culture Development (MYSEC), told parliament that since the inception of the Youth Development Fund (YDF) in 2009, the government has spent P11.5 million on 122 youth-owned start-ups. The funded projects spans agriculture, services and manufacturing.

According to the junior minister, close to 30 percent of the funded projects have collapsed, while some are struggling to repay their loans. The YDF finances youth-owned start-ups up to P100, 000, with only half of the money repayable as a loan at favourable terms - which sometimes does not include interest.

From the P11.5 million disbursed to Selebi Phikwe start-ups, about P5.8 million was issued as loans. Makgalemele disclosed that they have only managed to collect P186, 580 in the last ten years, leaving about P3.9 million as arrears. However, he explained that not all is bad debts as some businesses are still in the grace period where they are not required to service their loan obligations.

Makgalemele has blamed the dismal payments collection on several factors, including poor monitoring, shady business practices, tough operating environment made worse by closure of the BCL mine in 2016.

The monitoring tool that YDF uses does not give adequate data in terms of profitability of projects but rather an indication of whether business is operating or not, as well as number of employees, value of assets, cash statements, inventory, production capacity level and sales revenue for the project which does not necessarily amount to profit, the minister said.

“However, the tool is currently being modified to allow us to have more detailed information on the operational efficiency and profitability of the funded business.”

The minister told parliament that the abrupt closure of BCL mine, which was the heartbeat of Selebi Phikwe economy, resulted in a reduced and tight market base, affecting the youth funded businesses. There has been concerted efforts to revive Phikwe’s economy following the closure of the mine but most of the efforts are yet to prove fruitful.

Meanwhile, Makgalemele says the ministry is working on a set of strategies to make the YDF effective following strings of failed projects and soaring debts. In November 2018, Kago Ramokate, permanent secretary at MYSEC, told the Parliamentary Accounts Committee (PAC) that YDF has failed to collect around P400 million from the beneficiaries who received funding. He said that while their collection target is P6 million per year, they have only recovered P2.8 million as loan repayments.

Part of the YDF revamp includes continuous monitoring and capacity building of funded businesses, provision of mentoring and coaching to beneficiaries through collaboration with other stakeholders such as Local Enterprises Authority (LEA) and United Nations Development Programme (UNDP).

Makgalemele said they are going to prioritise funding of consortiums and youth cooperatives in identified sectors of the economy that have high potential for job creation and sustainability. Moreover, he said the development and implementation of YDF loan collection strategy is almost complete.

“My ministry is currently working with the United Nations Development Programme (UNDP) to conduct a holistic review of the Youth Development Fund programme with a view to make it more effective and I trust that we shall benefit from the feedback,” said Makgalemele.