Our Funding Model

The YERF will be disbursing funds through an Intermediary Finance Institution and thus has developed a project funding value chain which clarifies the roles and responsibilities between YERF and the Intermediary. The roles and responsibilities can be summarised as follows:

 

Lending Terms and Conditions

 

Size of Loans

There shall be different lending limits for Individuals, companies and cooperatives. Deviation from these limits shall be at the discretion of the youth fund in consultation with the intermediary. The following maximum lending limits shall be observed:

  • Individuals - E50,000.00
  • Companies - E100,000.00
  • Cooperatives - E150,000.00

 

Market Segmentation

There shall be different lending limits for Individuals, companies and cooperatives. Deviation from these limits shall be at the discretion of the youth fund in consultation with the intermediary. The following maximum lending limits shall be observed:

Variables Micro Very small Small Medium
Turnover (E) 2,500 60,000 150,000 600,000
No. of Employees 1 - 4 5 - 9 10 - 49 50 - 200

 

Term of Loans

While the fund does not have appetite for long term lending, it still remains a fact that development finance in its nature is more inclined to long term lending. There is therefore a need to balance need to maintain good liquidity as well as address the projects needs for its success. The term of loans shall therefore range between 12 – 36 months, subject to the size of the project as well as the nature of the project cycle. Loan repayments shall be scheduled in accordance to the production cycle of the businesses. The production cycle will differ from one business to another.

 

Deposit Contribution

It is enshrined in the mandate of Youth Enterprise Fund that the seed capital loans would be collateral free. The beneficiaries shall not be expected to contribute neither up front deposit nor collateral. This is aimed at maximising access to credit by youth entrepreneurs.

 

Coaching & Mentorship

Post funding, coaching and mentorship of the young entrepreneurs on an ongoing basis is one of the fundamental prerequisites to ensure performance and repayability of loans by the youth. The youth is often still immature and lacks experience in business management, therefore the fund will facilitate mentorship and coaching through local business development service providers.