Parallels can be drawn between the 1997 cash payouts to the war veterans and the recent disbursement of ‘youth development funds’ to the youth in Zimbabwe. The objectives of both programmes were to ‘economically empower’ ordinary citizens. While the war veteran payouts were just that, the YDF loans to the ‘youth’ are actually expected to be returned at some point. Under pressure from war veterans demanding payment for their role in the liberation struggle, President Robert Mugabe ordered unbudgeted payouts of 50,000 to each. The local dollar subsequently fell 71.5 percent against the greenback while the stock market crashed by 46 percent as investors rushed for the US dollar.
These unplanned payouts to war veterans went down the annals of history as the event that marked the beginning of the collapse of the country’s economy.
The ‘loans’ recently awarded to selected ‘youth’ in Zimbabwe may not accomplish glory of a similar magnitude, but what may follow can be anyone’s guess.
In the spirit of economically empowering the youth in Zimbabwe, the government – through the Ministry of Indigenisation and Empowerment – availed funds to be used in bettering the lives of youth through income generating projects. The funds are being managed through CBZ Bank, and insurance giant Old Mutual is part of a $10 million grant deal to the YDF. It is a big wonder what made the company agree to such an arrangement which stands to undermine its financial position. When companies like Old Mutual start to simply give away their net worth as gifts, we should get worried. But perhaps it is a clever way to escape the 51% remission guillotine.
In the YDF programme, there is no recovery plan, no obligation, and no collateral – just “young people who have benefited from the facility are encouraged to pay back the loans so that the funds can be extended to other eligible youth in revolving mode”. Are you kidding? So the 800+ lucky ‘youth’ whose names were published in recent press releases as beneficiaries are expected to create thriving businesses that will in the short term make profits from which the loans will then be paid back so that others can benefit.
There is no stipulated timeline by which the loans should be returned, so technically these are indefinite loans. There are just too many holes in this programme. As economist Erich Bloch would say it; the indigenization issue is being handled with a “total disregard for all economic fundamentals or principles.”
This could well be a grand scheme by some well placed individuals to throw away populist money and obtain a few kick-backs in the process. Can imagine obscure groups like Upfumi Kuvadiki getting such loans and actually being expected to pay them back, laugh out loud. We are assured that there are no ‘ghosts’ on the beneficiary list. Probably. I personally know someone whose name appeared on that list. To the best of my knowledge and without being judgmental, this person has plans to purchase a residential stand, possesses no entrepreneurial skills and actually got a consultant to develop his business plan that got him the loan. He wouldn’t say exactly how much he is going to get, but he invited me to ‘also apply and stop being jealous and missing out’.
The requirements are that you just fill in a form, submit a business plan, company registration document, identification documents and Bob’s your uncle, literally. You also need to prove that you are ‘legally constituted’ in a partnership; and if you are not, you are expected to ensure this happens within three months after receiving the loan (why bother then?).
Am I missing something here? Or perhaps I am just being jealous? Well, if you can’t beat em join em hey?
This is Zimbabwe.