Q: What is the mission of the Youth Enterprise Revolving Fund (YERF)?
A: We see ourselves as the bank for young entrepreneurial emaSwati, addressing the needs of the ‘missing middle’—a group often deemed high-risk by traditional commercial banks. These perceived risks stem from a lack of collateral, as many young people do not yet own assets to secure loans.
Our mandate is to provide seed capital to aspiring young emaSwati aged 18 to 35 years, enabling them to start businesses, create job opportunities, and alleviate poverty. This initiative reflects the Government of Eswatini’s belief in the potential of its youth. By harnessing the demographic dividends of a youthful population, which constitutes 72% of our total population, the Government aims to leverage this energy and innovation.
It is essential to empower our youth to actively participate in mainstream economic development. The Revolving Fund is one of the key programs the government has established to support and maximize the contributions of our young population.
Q: Are you fulfilling this mandate of funding youth entrepreneurs?
A: We have made significant strides over the years, but I would say that we have not reached that level of funding as yet. There are several reasons behind this; limited resources have constrained our ability to provide larger loan amounts. If we are giving out loans of about E2,000, then we have not met our mandate. Smaller loans in the past weren’t enough to help youth scale their businesses, and we’re working on improving this.
Q: What are you doing to ensure that you increase the loan uptake?
A: We have implemented several measures to ensure that we increase the loan uptake. One of them is automation. We have introduced a digital system that enables youth entrepreneurs to apply online. It is important to appreciate that we are dealing with young people who prefer digital methods over traditional way of doing things. However, I must reiterate that we still have paper applications for those who prefer using them.
The second thing we did to increase the uptake was the introduction of continuous loan applications. This means that entrepreneurs can apply anytime, compared to cycle applications.
The third measure was the decentralization of our services. We now have regional offices in all four regions of the country like Siteki, Lubombo, Nhlangano, and Manzini. Interestingly, we did not have an office in Manzini, yet it is the country’s most populated town and now we have an office there. Furthermore, we have also opened satellite offices across the country through partnering with different government agencies and ministries.
We have also partnered with the Ministry of Sports, Culture & Youth Affairs to share satellite offices in places like Sithobelweni and Hlatikulu. We’ve also collaborated with the Pigg’s Peak Town Council to use their community hall as a training space for young entrepreneurs. We are planning further expansion to areas like Mhlambanyatsi and Buhleni, where we see significant growth potential.
Additional partnerships that we have are with the National Agricultural Marketing Board (NAMBORD), National Maize Corporation (NMC) and SEBENTA National Institute.
As a result, we have noticed a significant improvement in loan uptake and overall applications because of these measures. For instance, in 2024, we received about600 loan applications amounting to E25 million.As impressive as this is, we still aren’t there, as we feel the quality of applications is not where we would like them to be.
Q: Serving as the CEO of the YERF means you deal with SMEs daily. How have you found it, particularly because you spent the better part of your career in the private sector and non-government organizations?
A: Being on the ground working with SMEs has been an eye-opener. It has transformed my life. As challenging as my job is, it is also gratifying and fulfilling. The opportunity to contribute to social and economic development, particularly through empowering the youth, has been incredibly rewarding. It’s not just about financial success but using the knowledge I’ve gained to create positive change.
Q: There have been complaints about delays in loan approvals and disbursements. Is it true, and if yes, what is the cause?
A: Loan approvals and disbursements are meant to happen within five days. The loan approval paperwork takes just one day, and we have our own reserves in-house, meaning the money doesn’t come from the government.
However, one of the key requirements is that we never give cash directly to the entrepreneur; instead, we send it to the supplier. The challenge arises when suppliers delay their deliveries. Some suppliers, including large companies, take 3, 6, or even 12 months to deliver, which significantly impacts the young entrepreneurs.
Another issue is that sometimes crops are banned from entering or leaving the Kingdom, which adds complexity, particularly for young entrepreneurs in agriculture. Generally, the loan approval process should take only five days as all the necessary paperwork is provided.
Q: Why do you think we are not where we should be when it comes to the level of entrepreneurship in the country?
A: We need all sectors of the economy to work together and be intentional and directional. Entrepreneurship needs to be a part of us as emaSwati. Research indicates that more than fifty thousand emaSwati run businesses, albeit informal in most cases. This goes to show that we are entrepreneurial, but we need all the sectors to come together. Having had the privilege of working in the private sector and with non-governmental organizations, I can assure you that we have the capability. We need to be intentional and directional, and not leave entrepreneurship to certain stakeholders. Government, schools, the private and public sectors, civil society and other stakeholders must all champion entrepreneurship.
Q: You mentioned that you are funding a lot of entrepreneurs in rural areas. What kind of businesses are they involved in?
A: The youth in rural areas engage in various agricultural activities, including poultry, livestock farming, as well as crop farming. In addition to agriculture, the youth are using their artisan skills, including welding and sewing. Our funding portfolio is diversifying beyond agriculture in rural areas, with young people also involved in construction and other associated industries.
Q: You recently rolled out a campaign urging beneficiaries to pay back their loans. In fact, over 150 beneficiaries were blacklisted last year. Could you share some of the factors contributing to this?
A: A significant factor contributing to the failure of youth entrepreneurs to repay their loans is the lack of an entrepreneurial culture and mindset. Many young individuals may not be exposed to an environment that fosters innovation, risk-taking, and resilience, which are essential for successful entrepreneurship. This gap can lead to a lack of confidence in managing their businesses effectively, ultimately impacting their ability to meet financial obligations.
Additionally, many young entrepreneurs lack the essential skills in financial management, marketing, and operations, leading to poor business performance and financial distress also family conflicts can disrupt business operations, causing projects to be abandoned and loan repayments to cease.
New Opportunities: Some entrepreneurs abandon their ventures when they encounter new opportunities, like further education or employment, indicating a lack of long-term commitment to their business.”
Cash flow constraints is another issue affecting early stage businesses, leading to them facing financial instability, with delayed customer payments and inconsistent sales cycles, negatively impacting cash flow. These linked with unfavorable economic conditions such as inflation, currency depreciation, and market volatility can reduce profitability and hinder entrepreneurs’ ability to meet loan obligations”.
Limited Access to Markets: Without sufficient access to markets, young entrepreneurs struggle to generate sales, impacting their ability to repay loans.
High Competition: Increasing competition in the entrepreneurial landscape makes it difficult for new businesses to stand out, putting pressure on profitability. Social and Cultural Barriers: Cultural attitudes toward debt and entrepreneurship, as well as the stigma of failure, may deter young people from prioritizing loan repayment.
Insufficient Support Structures: Lack of ongoing support, such as mentorship and business advisory services, leaves entrepreneurs without the guidance needed to navigate challenges.
External Factors: Unexpected events like geopolitical tensions, natural disasters, or economic downturns can significantly impact businesses, causing additional financial strain”.
Are there specific sectors or groups of beneficiaries who are more likely to default on their loans?
A: Fifty percent (50%) of the total non-performing loans are concentrated in the agriculture value chain, particularly in livestock sectors such as feedlot and pig farming. This significant increase in defaults is primarily attributed to the soaring costs of animal feed and the low selling prices for livestock products.
The reality is that the path to entrepreneurship is often fraught with challenges, but choosing to confront those difficulties head-on is what separates successful entrepreneurs from those who fall by the wayside.
Startup failures are a common part of the entrepreneurial landscape, particularly within the first three years.
Q: Lastly, what are your long-term aspirations for the Fund?
A: Our long-term aspiration for YERF is to create a sustainable and self-sufficient Fund that continually supports young entrepreneurs in Eswatini. I envision a future where our beneficiaries not only thrive in their businesses but also contribute to the local economy and create job opportunities for others. Our legacy will be defined by a generation of empowered entrepreneurs who inspire future innovators.
I aspire for YERF to play a key role in shifting cultural perceptions around entrepreneurship in Eswatini, fostering a mindset that embraces innovation and risk-taking. Our legacy should inspire young people to see entrepreneurship as a viable pathway to personal and economic growth, transforming the entrepreneurial landscape of our nation.
Q: Good luck CEO, as you continue with this mammoth task, and thank you for your time.
A: You are most welcome.