Billions spent, little to show: Why Kenya's youth funds keep failing

President William Ruto engages with graduate interns under The Affordable Housing Programme at State House, Nairobi. [PCS]

Every Kenyan administration takes power with a familiar promise: empower the youth, uplift women, unlock entrepreneurship and turn job seekers into job creators. And every administration exits leaving behind a trail of funds, frameworks, pilot programmes and billions of shillings whose impact is difficult to trace beyond glossy launch events, colourful banners and political speeches.

From the Youth Enterprise Development Fund (YEDF) to the Women Enterprise Fund, Uwezo Fund, the Hustler Fund and now the Sh30 billion National Youth Opportunities Towards Advancement (NYOTA) programme, the State’s approach to empowerment has remained consistent in ambition; but painfully inconsistent in outcomes.

President William Ruto’s NYOTA project, unveiled as a flagship youth empowerment initiative, was meant to be different. Bigger. Smarter. Data-driven. Backed by the World Bank. A bold reset from what the President has often dismissed as “handouts without accountability”.

Yet even before the first shilling has meaningfully changed a young person’s life, questions are already hovering like dark clouds over the programme’s design, priorities and long-term impact.

At the heart of the unease lies a sobering truth Kenya has long avoided confronting honestly: the country does not have a funding problem, it has a governance problem.

According to the project’s concept notes, NYOTA will cost Sh29.7 billion, largely financed through the World Bank’s International Development Association (IDA). Of this, Sh10.4 billion will be disbursed directly to youth as capital or support for start-ups. Another Sh2.6 billion will go not to businesses, but to the development of monitoring, evaluation and delivery systems.

In plain terms, nearly a quarter of the money meant to support young people will be spent figuring out whether previous youth programmes worked at all.

The World Bank document is candid about why this is necessary.

“This sub-component will support the creation of monitoring and evaluation systems so that evidence is generated on the effectiveness of existing and new interventions,” the report states.

That sentence is both an admission and an indictment.

After nearly two decades of running youth and women funds, the Kenyan government still lacks credible data to prove whether these initiatives actually reduce poverty, create jobs or build sustainable enterprises.

The NYOTA project aims to support 90,000 youth across all 47 counties, alongside 5,000 refugees and 5,000 host community youth beneficiaries in Garissa, Turkana and Wajir. Like its predecessors, it seeks to inject capital into youth-led businesses or help launch new ones.

But this approach is not new.

Since 2006, Kenya has experimented with catalytic funds meant to spur grassroots entrepreneurship. The Youth Enterprise Development Fund was created to provide affordable credit to young people starting income-generating projects. The Women Enterprise Fund followed. Then came Uwezo Fund. More recently, the Financial Inclusion Fund, popularly branded as the Hustler Fund, was rolled out with unprecedented political energy.

Billions have been disbursed. Poverty persists with unemployment remaining stubbornly high.

The uncomfortable question is no longer whether these funds are well-intentioned, but whether they are fundamentally flawed.

Sustainability challenge

One of the biggest challenges facing youth funds has been sustainability. Repayment rates have remained worryingly low, undermining the revolving fund model that was supposed to allow more beneficiaries to access credit over time.

Misappropriation and corruption have played a significant role.

This week, Labour and Social Protection Cabinet Secretary Alfred Mutua revealed that detectives are pursuing a couple who allegedly vanished with Sh18 million from the Youth Fund, money meant to help young people secure jobs abroad. He urged the suspects to surrender.

The incident is not isolated. Over the years, audit reports, parliamentary inquiries and whistleblower accounts have painted a troubling picture: funds diverted, ghost groups funded, politically connected individuals benefiting and genuine youth locked out. But corruption alone does not explain the crisis.

Another uncomfortable reality is the widespread perception among young people that government funds are not loans, but handouts, political rewards rather than financial obligations.

This mindset did not emerge in a vacuum.

Successive regimes have used youth funds as political currency. Campaign rallies are filled with promises of “free money for hustlers”, “millions for youth groups” and “government capital with no collateral”. Repayment is rarely emphasised with the same enthusiasm as disbursement. As a result, many beneficiaries view the Youth Enterprise Development Fund and similar programmes as entitlements tied to regime loyalty, not business contracts anchored on accountability.

This perception has crippled repayment culture and turned what should be development tools into political instruments.

In principle, state involvement in job creation and enterprise development is necessary. But in Kenya, youth empowerment programmes are deeply entangled with politics.

Political parties routinely package employment policies as campaign bait, using funds to gain legitimacy and support among young voters. Once in power, these programmes are rebranded, expanded or quietly discarded depending on political expediency rather than evidence of impact.

For the youth, the message is clear: funds belong to the government of the day, not the taxpayer.

Policy inconsistency

Kenya’s demographic challenge adds another layer of complexity.

The country’s population is growing rapidly, but economic growth is not keeping pace. Each year, hundreds of thousands of young people enter the labour market, competing for a shrinking pool of formal jobs and overstretched informal opportunities. No amount of micro-loans can solve a structural employment crisis driven by weak industrialisation, limited manufacturing, constrained markets and policy inconsistency.

“I think the government is trying to increase the money in circulation because Sh22,000 is not a lot given the current economic conditions,” says Dr David Kabata, a senior lecturer and public intellectual.

“Giving money to thousands of youth, most of whom have not received any training nor are they interested in operating businesses, repeats the same mistakes.”

According to Dr Kabata, disbursing money without a clear plan, given the history of failed empowerment projects, risks doing the same thing repeatedly while expecting different results.

“Unemployment will continue, because remember this is a loan from the World Bank meant to help young people, and the multiplier effect is that the government will increase its revenue through potential tax,” he says.

“Unfortunately, there are those who will view the opportunity through political lenses.”

From a risk management perspective, Kenya’s youth empowerment funds are failing not because of bad intentions, but because they are designed like high-risk portfolios with no safeguards.

According to Gilbert Mwalili, the executive director and lead consultant at Risk Africa iNNOVATIS, successive governments have treated youth funding as a political intervention rather than a risk-managed economic instrument.

Mwalili argues that the core flaw lies in the assumption that access to capital automatically produces viable enterprises.

In reality, most youth-led ventures operate in overcrowded, low-margin informal sectors with little room for growth or resilience. Without market access, skills development and shock absorbers, such businesses are structurally exposed to failure.

“From a risk management standpoint, these funds are structured exactly like portfolios that ignore exposure, concentration and default risk,” Mwalili says. “When you push money into saturated informal sectors without controls, failure is not an anomaly, it is the expected outcome.”

He adds that the political framing of youth funds has created a dangerous moral hazard. When programmes are sold as government goodwill or campaign rewards, repayment becomes optional in the minds of beneficiaries.  “Once beneficiaries perceive public funds as political gifts, the system quietly rewards non-repayment and punishes discipline. That is not a youth problem; it is a design failure,” he says.

Mwalili also points to weak governance and control systems as a major red flag. Allocating billions before building credible monitoring and accountability frameworks has left these funds vulnerable to abuse, leakage and outright fraud.

“Needing billions to monitor funds after disbursement is an admission that risk management was never embedded at inception. In any serious institution, that would be classified as negligence,” he says.

Another critical weakness, he notes, is concentration risk. Youth funds repeatedly channel money into the same informal micro-enterprises, retail, boda boda transport and small trading, without diversification into productive, scalable sectors.

This guarantees systemic failure. When one sector collapses, everyone collapses together. Each failed fund, Mwalili warns, carries long-term fiscal and reputational risks for the State.

“If NYOTA is treated as a political promise instead of a portfolio to be actively managed, it will fail like its predecessors. Youth empowerment must be approached as a risk management problem, not a public relations exercise,” he says.

Legal framework

Beyond economics and risk, lawyers warn that NYOTA may also be operating on dangerous legal ground.

Essendi Kenneth, a lawyer, says the fund risks sliding into illegality and economic crime unless it is urgently anchored in law.

According to Kenneth, the youth empowerment programme; launched under the National Government Constituencies Development Fund, lacks a dedicated legal framework to govern its operations, oversight and accountability.

Despite disbursing Sh22,000 to Pochi la Biashara accounts and Sh3,000 to NSSF savings for start-ups, the fund has no specific Nyota Fund Act to regulate eligibility and use of public money.

“Without a Nyota Fund Act, the programme is walking a legal tightrope and risks becoming another Uwezo Fund, politically popular but structurally exposed to default and misuse,” Kenneth says.

He warns that disbursements to ineligible university students; many of whom divert funds to school fees; violate the Public Finance Management Act, which requires purpose-specific use of public funds.

“Once money is diverted from its stated purpose, it ceases to be policy failure and becomes a prosecutable economic crime,” he says.

Kenneth also raises alarm over fake “Nyota Fund” apps and fraudulent M-PESA alerts targeting youth, warning that such scams violate the Computer Misuse and Cybercrimes Act and further erode public trust.

He says Nyota’s current structure exposes it to court challenges and calls for urgent enactment of a Nyota Fund Act to embed oversight, audits and anti-corruption safeguards. 

Youth empowerment in Kenya has become a revolving door of promises, funds and disappointment. Each new programme arrives draped in hope, only to be swallowed by weak institutions, political interference and unrealistic expectations.