Loans for youth

October 19, 2019

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THE Kamyab Jawan Programme launched by Prime Minister Imran Khan to deliver on one of his party’s major election promises has wide scope. It aims primarily at creating new jobs and reducing poverty by disbursing interest-free microloans and subsidised small loans among young men and women, especially from the country’s 45 most backward districts, for setting up new businesses or financing existing small enterprises. The scheme is also expected to facilitate the establishment of smart science laboratories at seminaries in order to bring the students there into the mainstream, while also providing skills training to the youth in collaboration with the industry. Further, teachers will be trained to impart skills and provide vocational training, thus narrowing the skilled labour gap between industry and the services sector. Overall, the various initiatives under this programme will cost Rs100bn. Out of the total amount, 25pc is reserved for women. If spent well, all this money, which is to come from the UNDP, is projected to reduce poverty and youth unemployment in the country.

This is not the first scheme that has been launched in the name of empowering the youth. Successive governments have undertaken similar ventures in the past, with varying degrees of success. More recently, the Nawaz Sharif administration had introduced a similar, multipronged initiative — the Prime Minister’s Youth Loan Programme — shortly after coming to power in 2013, promising to give subsidised loans cumulatively amounting to Rs100bn to the youth over a period of five years. In fact, the PTI rulers’ youth project borrows generously from the previous government’s initiative. However, the earlier scheme could achieve very limited results because of several political, financial and administrative factors. Less than a quarter of the total funds allocated for disbursement in five years could be lent, mostly to applicants from the PML-N stronghold of Punjab.

Since no study has ever measured the outcome of that scheme — or any other such initiative in the past — it is hard to comment on the impact it might have had. Yet it is safe to assume that such initiatives are inherently constrained because they are largely driven by political motives. One big factor that had led to the failure of the previous youth programme was the lack of interest shown by banks for fear of losing money. The PTI has promised to maintain complete transparency and uphold merit to keep the programme free from political interference — no easy task considering the pressure mounted by its legislators who would want their voters to be accommodated. Moreover, since the scheme is based on the ‘push strategy’, whereby the government will be ‘pushing’ loan disbursement, it would be a good idea to organise sessions for the loan applicants to train and guide them on the different aspects of running the businesses that they want to invest in.

Published in Dawn, October 19th, 2019