Report exposes irregularities in self-employment programmeA field study conducted by the National Vigilance Centre, an anti-graft body under the Prime Minister’s Office, has unearthed several irregularities in the Youth Self Employment Programme launched in 2008.
A field study conducted by the National Vigilance Centre, an anti-graft body under the Prime Minister’s Office, has unearthed several irregularities in the Youth Self Employment Programme launched in 2008.
According to the report prepared by the NVC team after visiting Kaski, Dhading, Sunsari and Dhanusha districts where credit was disbursed through cooperatives under the self-employment scheme, neither the targeted group has got loans and nor has there been proper recovery of the loans.
The study also found that the Youth and Small Entre-preneur Self Employment Fund (YSESEF) made excess payments to institutions such as the Federation of Nepalese Chambers of Commerce and Industry, which oriented aspiring entrepreneurs between 2008 and 2011, going against the decision of the YSESEF board. It also pointed out unlawful recruitments.
NVC Spokesperson Bishnu Raj Lamichhane said they have submitted the report to the Commission for Investigation of Abuse of Authority and the Ministry of Youth and Sports, under which the YSESEF operates.
Credit off target
According to Clause 10 of the regulation on Youth and Small Entrepreneur Fund (Operation), youths who are not engaged in any profession are the beneficiaries. However, loans were issued to bullion traders, vehicle owners, wholesalers and even suppliers. For instance, the Community Women Saving and Credit Cooperatives at Godar, Dhanusha, gave money to poultry firms, fancy shops, furniture traders, and hoteliers. The Itahari-based Ankur Saving and Credit Cooperative funded cold drinks shops and bullion traders.
The Parijat Women’s Saving and Credit Cooperative based in Itahari, Sunsari, also issued credit to bullion and mobile traders. The Taleju Saving and Credit Cooperative granted loans to transport entrepreneurs and grocers. The Divyajyoti Cooperative based in Digambapur, Dhanusha, gave loans to tractor owners, shopkeepers and tent houses.
Credit extended by the cooperatives has not led to self-employing the youth as planned, the report notes. “This questions the very significance of the programme.”
Prem Dangal, executive vice-chairman of the YSESEF, admitted that there were instances of credit disbursement to the people outside the target group. “However, I have got reports from our staff that the NVC didn’t reach the actual beneficiaries before preparing the report. The NVC team mostly relied on reporting from the cooperatives that had categorised newly self-employed persons as ones already employed,” he told the Post.
The cooperatives also charged interest rates higher than the YSESEF ceiling. A board meeting of the YSESEF had decided on January 14, 2017 that borrowers would be charged 10 percent interest at most.
The Small Farmer Agriculture Cooperative at Nilkantha, Dhading, was found to have extended loans at interest rates as high as 13.5 percent. The Baraha Saving and Credit Cooperative, Dharan also charged interests as high as 12 percent, according to the report. The YSESEF provides bulk credit to the cooperatives for lending to the actual recipients.
10 percent non-performing loans
Borrowers of credit under the scheme have not repaid a significant chunk of the money lent to them. The NVC probe termed up to 10.5 percent of the total credit extended until the fiscal year 2016-17 as non-performing loan (NPL)—money not paid back within the deadline.
Of the Rs4.92 billion extended until the fiscal year 2016-17 in total, as much as Rs516.86 million remained as bad loan, according to the report. This is manifold the average bad loan of A, B and C class banks and financial institutions. Their non-performing loans accounted for 1.6 percent as of the fiscal 2017-18, according to Nepal Rastra Bank.
However, Dangal said they have already brought down the NPL to Rs270 million. “NPL is largely related to the cooperatives whose promoters were affiliated to political parties,” he said.
No record of beneficiaries
YSESEF documents show that as many as 362,335 people received skill-based training. According to the NVC report, the YSESEF does not have the records of those who attended training sessions.During the field study, none of those supposedly trained was found to have got a loan. “Millions of rupees were spent in the name of training for targeted beneficiaries but the entire amount went in vein,” the report states.
‘Illegal’ payment to the FNCCI
The YSESEF Board of Directors on March 11, 2009 decided to pay each orientation session participant Rs50 per day in snacks allowance. It had also decided to distribute Rs25 per person per day under miscellaneous expenditure, Rs25 per certificate issued and Rs1,000 for a trainer’s remuneration per session.
The YSESEF paid to the FNCCI and its district and municipal chambers organised three-day orientation sessions for 334,150 individuals.Based on the extra payment of Rs100 per person per day, the FNCCI and its district and municipal chambers received Rs100.24 million extra “illegally”, according to the report. The FNCCI and its district chambers had conducted orientation programmes for youths in fiscal years 2008-09, 2009-10 and 2010-11.
The report calls for recovering the expenses from those who authorised the payments while initiating legal action against them.FNCCI President Bhawani Rana said she had no information of the alleged extra payments made to the FNCCI for orientation.
According to the report, advance payments made to the FNCCI and the Nepal Chamber of Commerce (NCC) for orientation were yet to be settled. The Fund had paid Rs108.99 million to the FNCCI and Rs3.8 million to the NCC in advance. Rana admitted that some of the transactions were yet to be cleared as the district and municipal chambers had delayed the submission of bills and receipts. “By now, most district chambers have cleared the transactions,” she told the Post.Dangal also claimed that most of the advances—Rs96.7 million—paid to the FNCCI and the NCC had been settled.
Illegal staff recruitment
Officials were recruited without following the due legal process. According to the report, many had been hired even without collecting the copies of their qualification certificates.
Getting public posts by submitting false details on educational qualifications, name, lineage, age, caste, address or nationality is punishable under the Corruption Prevention Act. The report recommends action against those employed by submitting false details.
Deal signed with CTEVT against the procedure
On October 1, 2013, the YSEF board decided to sign an agreement with the Council for Technical Education and Vocational Training for training prospective entrepreneurs going against the due procedure, according to report. Spending under the heading amounted to Rs27 million.
“Neither the list of beneficiaries was collected nor the cost was estimated before running the training programme,” the NVC report states.