The government has announced plans to merge state-owned financial institutions that provide loans into a single entity to enhance efficiency and curb misuse. The initiative will see the Uwezo Fund, Youth Fund, and Women Enterprise Fund consolidated into a new entity known as the Biashara Fund.
Speaking in Khwisero, Kakamega County, Cooperatives Cabinet Secretary Wycliffe Oparanya outlined the objectives behind the decision. The move aims to streamline access to financial resources for small businesses while preventing loopholes that have previously led to misuse. By integrating the three funds, the government seeks to eliminate cases where individuals unfairly access multiple loan allocations, ensuring fair distribution of financial aid.
The new strategy is expected to promote transparency and accountability in the disbursement of funds. Under the current system, some beneficiaries exploit the segmented nature of these funds to secure multiple loans, thereby disadvantaging other potential recipients. The consolidation into the Biashara Fund is seen as a measure to prevent such instances and create a more structured and equitable approach to financing.
Additionally, the government is focused on reducing loan defaults, which have been a significant challenge in the current framework. While addressing the public, Oparanya emphasized that bringing the funds together would help address this issue and create a more sustainable lending model. The government’s broader objective is to enhance financial inclusivity and support small-scale entrepreneurs without the inefficiencies that have hampered past initiatives.
The Hustler Fund, another government-backed financial program, has been part of the broader Biashara Fund initiative. It provides credit to small businesses and individuals who lack collateral or a formal banking history. However, loan default rates have posed a challenge, with reports indicating that non-performing loans under the Hustler Fund have recently reached 21 per cent. A significant portion of borrowers have struggled to repay their loans, prompting the government to explore new strategies for loan recovery.
To address this issue, a Bridge Loan program was recently introduced to incentivize responsible borrowing. This initiative is designed to reward individuals who demonstrate good repayment habits while providing a structured pathway for defaulters to improve their credit status. The Bridge Loan program aims to encourage financial discipline among borrowers while ensuring that the lending system remains viable in the long run.
By merging the funds and introducing stricter measures, the government hopes to foster a culture of responsible borrowing and financial sustainability. The restructuring will also enable more efficient monitoring of loans, reducing cases of mismanagement and improving overall fund performance.
The establishment of the Biashara Fund aligns with the government’s commitment to empowering small businesses and ensuring that financial resources are accessible to all eligible individuals. By creating a unified and well-regulated funding system, the government seeks to build a more robust and inclusive financial environment, ultimately supporting economic growth and development.
