During the MbeleNaBiz Award Ceremony at Kasarani on Wednesday, the president said his government is committed to youth development through creating an enabling environment for youth led start-ups.
The Government’s initiative will invest in young entrepreneurs whose ventures will generate employment opportunities and earnings for unemployed youth. Through the MbeleNaBiz Business Plan Competition, 750 youth from across the country were awarded a Sh.1.3 Billion grant.
“Of this amount, a total of Sh900 million will go to 250 young entrepreneurs as grants. Each of these young entrepreneurs will receive an award of Sh3.6 million to develop their dreams. The balance of Sh450 million will be given as grants to the other 500 winners. Each of these winners will get a total of 900,000 shillings to develop their innovations and ideas,” he said.
BBI and Kenya’s Youth Economy
President Uhuru said the Building Bridges Initiative (BBI) would make it easier for the youth to do business. Through BBI, it is intended to provide a 7-year tax holiday for young entrepreneurs. In sensitization to the importance of BBI, president Uhuru said the winners would have saved billions in taxes in the next 7 years if the bill was in place.
“If for instance, one of the grantees of this project decides to start a nail-making business, he or she plans to spend about Sh1.2 million buying the necessary equipment and setting up.
Market estimates suggest that the net returns to such a start-up business would be about Sh150,000 a month or Sh1.8million a year. In a normal tax scenario, the young entrepreneur would owe KRA about Sh540,000 of the Sh1.8 million profit each year. And in 7 years, they would have paid KRA approximately Sh3.7 million in taxes.
But with the proposed BBI tax holiday, such an enterprise by a young person would not only save the Sh3.7 million in seven years but will have generated a total of Sh12.6 million in the seven years.
And to bring it closer home, if the 250 young entrepreneurs were to earn an average of Sh150,000 every month from their initial grant of Sh3.6 million, they would collectively make Sh37.5 million a month in profit.
And this translates to an average of about Sh450 million per year or Sh3.15 billion in seven years. If the taxman took his cut from these earnings, the 250 grantees we are empowering today would “forego” close to one billion shillings to tax in seven years.”
The Youth Enterprise Development Fund (YEDF)
President Uhuru did not fail to applaud YEDF. YEDF is one of the Government’s strategies to address youth unemployment through Entrepreneurship. He said the Fund has so far supported over 2 Million young men and women with enterprise loans worth Sh13.5 billion.
The president said the new strategic plan for 2021-2024 will raise the revolving Fund from Sh4.6 billion to Sh5.5 billion. Additionally, it is expected to raise loan disbursement to Sh16 billion in 5 years.
“I am pleased to note that the Fund has disbursed a total of Sh501 million in loans since the first case of COVID-19 was reported in Kenya. These loans have helped to sustain youth owned enterprises, thereby enabling them to diversify into new opportunities, and to maintain employees.
“The plan we launch today aims to transform the Fund into an efficient and responsive entity that meets the needs of our young people. We consulted widely; we listened keenly; the plan is our attempt to align the work of the Fund with the expectations and aspirations of our young people.” President Uhuru Kenyatta.
Apart from loan disbursement, YEDF offers training to the youth on business growth and business finances. This training will help many young entrepreneurs to recover from the losses they experienced during the Covid-19 Pandemic.
The World Bank is one of the main supporters of KYEOP and was represented by Keith Hansen, Kenya Country Director. Hansen said Kenya’s economy has shown great resilience during Covid-19 appreciating the Government for its efforts to manage the situation.