What is the Uwezo Fund?
The Uwezo Fund stems from the pledge His Excellency the President made to allocate the Kshs. 6 billion that was meant for the presidential run-off to youth and women groups. Following from this, the National Treasury allocated and Parliament approved the sum of Kshs. 6 Billion to go towards this Fund in the budget covering the Financial Year 2013/14.
The objectives of the Fund are:
- To expand access to credit to promote youth and women business and enterprises at the constituency level and thereby enhance economic growth towards the realization of the goals of Vision 2030;
- To generate gainful self-employment for the youth and women;
- To model an alternative framework in funding community driven development.
The Uwezo Fund will employ the principles of table banking and revolving funds to create a unique blend of financing for youth groups and will be disbursed at the constituency level modeled along the Constituency Development Fund framework. This will enable women and youth to access the Fund at the local level thereby reducing the transaction costs that they would have otherwise incurred. Constituency Uwezo Fund Committees shall be established, and be responsible for receiving and evaluating proposals and eventually making decisions on funding based on set guidelines. These Committees will comprise of representatives from each ward (representing women, youth and persons with disabilities), Government officials, and the CDF Fund Account Manager.
H.E. the President will be the national champion and overall Patron of the Uwezo Fund.
From the total fund allocation of Kshs. 6 billion, a one off administration charge of 3% will be deducted while Kshs. 500 Million will be earmarked for capacity building of groups, in order to ensure that the recipients are capacitated on the skills, knowledge and market linkages necessary to run respective group enterprises. The balance of the fund thereafter will be divided between all the constituencies with 75% shared equally among all constituencies and 25% being shared on the basis of the poverty index for equalization purposes.
Of the total amount received per constituency, 20% will be earmarked for religious institutions as a grant to administer to women and youth groups within their jurisdictions. The balance per constituency thereafter will be administered as a 75% loan, and 25% grant for each beneficiary group.
Administration of the fund will be on the following terms:
i. The monies will be payable only to a group, from a minimum of Kshs. 50,000 and not exceeding Kshs 500,000 at a time.
ii. Interest rate on the loan component of the fund will be set annually, and charged between 0% to a maximum of 1%. The interest rate chargeable this financial year (FY2013/14) is 0%.
iii. The fund will be distributed on a first come first served basis, depending on eligibility of the application.
iv. In determining the total amount a group is eligible to receive, the following considerations will be made:
• The total amount contributed by the group;
• The current status of contribution;
• The proposed plan for the loan;
• The length of time the group has been in existence (Preference will be granted to groups that have been in existence for at least six (6) months).
v. The repayment period for the loan element will be determined by the following:
• The amount of money borrowed;
• The size of the group;
• The proposed plan for the loan.
vi. Groups will be allowed a 6 month grace period before commencement of repayment of the loan component.
vii. All loans components will be payable within 2 years from the end date of the grace period.
All registered Youth and Women groups, and religious organizations are eligible to participate in the Uwezo Fund.
For women and youth groups to qualify, they must:
- Be registered with the Department of Social Services or the Registrar of Societies with a membership of 5 – 15 members.
- The youth group membership must be between 18 and 35 years of age. The women’s group must be made up of all women
- Preference will be granted to groups that have been in existence for at least six (6) months.
- Be based and operating within the Constituency it seeks to make an application for consideration.
- Operate a table banking (chama) structure where members make monthly contributions according to the groups’ internal guidelines (evidence of monthly contributions will be a requirement).
- Hold a bank account in the name of the group.
- Recommended by the Chief of the location.
- For religious institutions to qualify, they must be:
- Registered entities;
- Recommended by the Inter-religious Council of Kenya;
- Have listed youth and women groups.
9. An application to the Uwezo fund shall be accompanied by:
- A signed guarantee form executed by each member of the women or youth group individually committing to repay the loan component requested by the group.
- Individual group member reference letters from recognized leaders in business, religious organizations, national or county government administration in the location validating the member’s credibility.
Link to 30% public procurement and reservations provisions:
Women and youth groups that form and establish enterprise structures will be encouraged to take advantage of the 30% public procurement preference and reservations provisions, and thus having nurtured their enterprises through the fund’s seed capital, engage in establishing legal entities that can transact with government, and offer goods and services as appropriate.
Previous initiatives to provide credit for socio-economic development have been undermined by lack of skills on the part of the target beneficiaries. To avoid this pitfall in the implementation of the Uwezo Fund, we have set aside a significant amount totaling KES 500 Million for capacity building of the target beneficiaries of Uwezo. The Ministry of Devolution and Planning has already advertised in the media seeking interested parties to apply to provide capacity building services to target beneficiaries in accordance with existing procurement regulations.
Fund Roll Out:
Upon notification of the establishment of the respective Constituency Uwezo Fund Committees, registered youth and women groups will be required to submit their applications to the committee for consideration. The groups will be required to undergo the designated capacity building training programmes upon successful application.
Information about the Fund:
Information on the Uwezo Fund is available on www.uwezo.go.ke and www.uwezo.go.ke. Further information is available on facebook (Uwezo Fund) and twitter (@uwezofund) whose authentic accounts are accessible through the Uwezo Fund website.
Anne Waiguru, OGW