CABS halts youth empowerment loans

HARARE - The Central African Building Society (CABS) has halted disbursement of youth empowerment loans due to a high default rate.

The financial group was granting youths loans to fund projects under a $10 million Kurera-Ukondla Youth Empowerment Fund.

“Disbursements were stopped as of May 2014 and will only be resumed after the Trustees come up with a new strategy,” the group’s managing director Kevin Terry told Parliament.

“As of June 20, 2014, 78 percent of the loans were non-performing.

“Of the $4,9 million disbursed, about $4,2 million is in a non-performing position,” he said.

He said the bank currently holds $5,5 million under the fund as they await trustee approval to disburse.

The trustee board consists of representatives from Old Mutual who, according to Terry, make the decisions regarding the fund.

Around 22 000 applications have been received to date and     3 608 were approved as of April 2014.

He said the performance of the loans is not ideal and trustees are looking at capacity building for beneficiaries.

“The main reason for the defaulting is the obvious mismanagement, so we are going to partner minister Nhema in capacity-building programmes in the various Vocational Training

Centres around the country,” said Terry.

The fund was developed from 2,5 percent of Old Mutual shares valued at $10 million.

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