MODERATING EFFECT OF COLLATERAL ON THE RELATIONSHIP BETWEEN YOUTH EMPOWERMENT STRATEGY AND ECONOMIC DEVELOPMENT OF YOUTH IN KESSES CONSTITUENCY, UASIN GISHU COUNTY

Abstract

The issue of youth economic development is of concern both to the developed and developing countries. The government of Kenya has created government funds such as the Youth Fund, Women Fund and the latest being the 6 Billion shillings Uwezo Fund created by the Jubilee Government. All these have been created with an aim of promoting economic development hence reduce the unemployment rate among the youth and improve the economy. Despite this effort by the government the uptake of these government funds by the youths still remains low. If the issue of low uptake will not be addressed, it will lead to lower capital base which will limit growth of youth enterprises due to lack of collateral. The purpose of this study is to underscore the moderating effect of collateral on the relationship between youth empowerment strategy and economic development of youth in Kesses Constituency. The objectives of this study include the effect of loan lending, market support, market linkages, training on economic development of youth. Also determine the moderating effect of collateral on the relationship between youth empowerment strategy and economic development of youth in Kesses Constituency A lender-based theory of collateral, the theory of youth empowerment, and the theory of asset-building community was adopted by the study. The study adopted the explanatory research design. Target population was 200 youth with a sample size of 133 determined by Slovin formula. Reliability was tested by Cronbach’s alpha coefficient whereas the validity was measured through the content validity. Questionnaires was used as data collection instruments and data collected was analyzed using descriptive and inferential statistics. The collateral had a significant positive effect on the economic development. The coefficient of determination (R squared of 0.95) indicated that 90.5% economic development was explained by youth empowerment strategy. There was a positive significant effect of market support (β2=0.324, p<0.05), market linkages (β3=0.622, p<0.05) and training (β4=0.105, p <0.05) on economic development. There was negative significant effect of loan lending (β1= - 0.089, p<0.05) and collateral (β5= -0.078, p<0.05) on economic development. Collateral and youth empowerment model results showed R2= 0.911 and significant (p<0.000 explained only 91.1 % of the variance on economic development. The interaction between youth empowerment strategy and collateral accounted for significant proportion of 81.2 % of the variance in economic development but negative insignificant effect of (β6 = -0.081, p >0.05). Based on the findings loan lending, market support, market linkages training and collateral programmes should be rolled out among the youth. These programmes should be tailored in a manner that can equip the youth with skills to run their own enterprises. This research will benefit the government of Kenya in planning for more resource allocation to the youth, the donors in identifying the gaps in youth empowerment strategy and take corrective measures.