KATHMANDU: Seventeen years after its creation, Nepal’s Youth and Small Entrepreneur Self-Employment Fund—established with the aim of empowering unemployed youth through interest-subsidized loans—has come under scrutiny for large-scale financial mismanagement, lack of transparency, and failure to recover loans.
The fund was announced in the fiscal year 2008/09 by then-Finance Minister Dr. Baburam Bhattarai under the government of Prime Minister Pushpa Kamal Dahal ‘Prachanda’, following the Maoist party’s electoral victory after the end of the armed conflict.
The program promised collateral-free loans of up to Rs 200,000, vocational training, and support for self-employment in agriculture and service sectors.
However, a recent report by the Office of the Auditor General (OAG) reveals disturbing gaps in the fund’s operations.
As of June 2024, the fund has disbursed Rs 3.61 billion in loans but failed to require proper business plans or define clear investment areas. Loans were distributed through banks and cooperatives without a transparent selection or monitoring process.
The report highlights that Rs 1.22 billion remains outstanding from 1,239 cooperatives, including principal, interest, and penalties. An additional Rs 315.3 million in loans disbursed through 15 banks and financial institutions lacks clear documentation of interest and penalty dues.
Furthermore, the fund has Rs 3.86 billion in unpaid liabilities from loans it borrowed from various financial institutions since 2008. The fund failed to maintain proper accounting or verify balances with banks, raising concerns about accuracy in its financial reporting.
Auditors also found that some cooperatives and individuals misused funds and never repaid them. In several cases, loans were issued without repayment timelines. One cooperative now in the process of liquidation still owes Rs 28.5 million, raising the risk of full loss.
The Auditor General recommends legal and structural reforms, stricter recovery measures, and updated financial records to curb ongoing misuse of public resources. Despite the fund’s claims of nationwide success, the report suggests that political influence and weak oversight have compromised its core objective: creating self-employment opportunities for unemployed youth.
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