Youth-owned businesses will be handed a seven-year tax break, with graduates allowed a four-year grace period before payment of their study loans, in grand plans by the Building Bridges Initiative (BBI) to address the problems of young people.
The report, launched on Wednesday by President Uhuru Kenyatta and ODM leader Raila Odinga, proposes an amendment to The Higher Education Loans Board Act 1995 (No. 33 of 1995) to give loanees a grace period of four years from the date of completion of their studies before they can commence repayment of loans advanced to them.
Thousands of Kenyans whose education was funded through Helb loans have in the past seen their facilities accumulate high penalties since they start attracting interest immediately, irrespective of their employment status.
Thousands of former beneficiaries have also been listed with credit reference bureaus (CRBs), limiting their chances of accessing loans from financial institutions.
In another proposal, Helb loans will start attracting an interest when the beneficiary starts earning an income. A high unemployment rate among graduates has been cited as a main cause for non-payment of the loans.
“The proposed amendments further exempt loanees without a source of income from paying interest on the loans advanced to them until such time that the loanees start earning an income,” the report reads.
The proposal to delay the repayment of loans may, however, roll back gains made by Helb in loans recovery. Former beneficiaries still owe more than Sh6.5 billion in non-performing loans.
Besides the seven-year tax break – a huge enticement to the youth planning to go into business – the BBI team also wants the establishment of business incubation centres to provide business advisory services, which includes access to capital and government contracts.
“Most young people speaking to the steering committee during the validation period exhibited frustration with the job market. They complained of having met the educational goals that they were told would allow them to get employment, but when they applied for jobs, there were persistent demands for them to have experience, among other unattainable requirements for a new entrant in the job market,” says the BBI report.
The youth, said the team led by Garissa Senator Yusuf Haji, called for entry-level requirements for jobs in the private and public sector to be made more accessible for those joining the work force.
The BBI team wants the Micro and Small Enterprises Act, 2012, amended, to task the authority to register and certify businesses owned by young people, as well as those by women and persons with disabilities.
The report also wants the cost of doing business and impediments to starting enterprises addressed, as well as promotion of the culture of saving among Kenyans.
The report also called for the recognition of the home office as a place of business — a huge turnaround that saw many people working from home during the Covid-19 pandemic, and which the committee now wants extended.