Rethinking the Hustler Fund Strategy

Just like learn, unlearn, and relearn, we do need to think, and rethink as we work on our goals, and hustler fund is not an exeption. Towards the 2022 general election, the United Democratic Alliance presented a model of a fund that would benefit the hustlers. The hustler fund captured the attention of many people, including politicians from the opposition. The Bottom Up Economic model represents a promising idea, and there is room for further improvement in the hustler fund initiative. Let us look at a model that, given a chance could can be successful. Let us dissect the hustler fund as it currently is, then present an “improved” proposal. President William Ruto’s hustler fund initiative was part of the Bottom-Up Economic model.

Bottom-Up Economic Model

The Kenya Kwanza Government’s Bottom-up Economic model had a goal of improving the livelihood and grow the kenyan economy. The model is about investing resources available in ways that will create most jobs at the bottom of the pyramid. This will in turn stimulate the country’s economic growth, where majority of the people are. Despite the recognition of this issue, there has been minimal progress in formalizing the informal sector.

The Hustler Fund

The hustler fund website indicates that the main idea behind the hustler fund is to promote financial inclusion. The fund targets members of the community who are at the bottom of the pyramid. These people, tagged as hustlers, mainly comprise motorcycle owners, vegetable sellers, the youth, and small business people. It aims to improve financial access for personal, micro, small, and medium-sized enterprises (MSMEs) in Kenya. One can access the fund digitally through different mobile money platforms through its implementing partners.  

The establishment of the fund was backed by facts, however a few critical aspects were left out. Those who spearheaded its establishment, backed by evidence argued businesses at the bottom of the pyramid are economically efficient and profit-making and need to be formalized and supported financially. 

The Hustler Fund’s Objective

Through the hustler fund the government aims to:

• shift the mindset of the Kenyan Youth from white-collar or blue-collar formal employment to informal sector small Business Ownership and the Agriculture Value Chain.
• carry out capacity building in the areas of Entrepreneurship, Business Registration, Basic Book Keeping, Group Dynamics and the power of Savings for Capital Formation, Economic Shocks and retirement.
• help in the formation and registration of small groups and transform them into Community Based Organizations or Chamas with a view to evolving them into Savings and Credit Societies (SACCOS).
• carry out capacity building in the area of Aggregation and Cooperatives for better competitiveness and better access to the market.
• end exclusion and criminalization of livelihoods, and level the playing field for all investors big and small.
• Make Kenya not just a middle income country in terms of GDP averages, but a middle class society. 

The government intends to inject 500 billion Kenya shillings into the fund over the next five years. The money is accessible to both individuals and groups, who apply them via either mPesa, Telkom or Airtel money. When it was launched, most people received between 500 and 3000 Kenya Shillings. At the time, the Kenya Kwanza government leadership reiterated that limit growth is dictated on one’s credit status.

Financial Grade

Last year, during the launch of Hustler Fund micro credit, the president said that the government was reviewing the history of its 18 million subscribers and awarding them a financial grade. This grade will determine an individual’s loan limit based on how regularly they borrow and repay. The President further said that the Hustler Fund Micro Credit will allow Saccos and and Groups to borrow on behalf of their members. 

In November last year, the president said that the government intended to reorganize and register groups. These groups can then borrow between KSh200,000 and KSh1 million, to further boost enterprises to broaden people’s opportunities. The target is micro, small, and medium-sized enterprises.

“Those who have demonstrated a commitment to saving, and their savings exceed their loan limit will have their credit limits doubled.” President William Ruto

Hustler’s Fund at One Year

One year after its launch, Hustlers Fund, Kenyans have borrowed and received 39 billion shilings in loans. The money was disbursed to individuals and groups, with 21.8 million shillings benefitting individuals. By November 30th last year, 28 billion shillings had been repaid. Furthermore, the group fund had seen the creation of 591,661 groups, out of which 52, 716 groups serving 1,215,072 approved members had accessed funding. By March this year, the total amount loaned was 49 billion shillings. According to the CS for Cooperatives, Micro, Small and Medium Enterprises, more than 50% of Kenyans have opted into the hustler fund. The CS further claimed that most borrowers of the fund are men, representing 53% of all the borrowers. In terms of age, youth aged between 18-29 years constitute 38.5% of the borrowers, whereas those between 30-39 constitute 28.8%.

“Rethought” Hustler Fund

Setting the fund is a good idea and beneficial to many people at the bottom of the pyramid. Borrowing patterns show that youth aged between 18-29 years constitute 38.5% of the borrowers, whereas those between 30-39 constitute 28.8%. This represents an active population that can generate more income if empowered. The Hustler Fund as it is currently gives loans to individuals and groups which makes it difficult for an individual who qualifies for 500 shillings. 

Another model can have the young people and those at the bottom of the pyramid form companies or register businesses, and apply for the fund. The loan can be capped at 100, 000 for a start, then the business or company is awarded a tender or contract worth an amount slightly higher than what was borrowed. This will ensure that after the government takes its money, the groups get some profit. These tenders should be reserved for the companies, and the money paid without any delay after the work has been completed and assessed. 

To recover its money, the government will take back the loaned amount and give the profit to the business. The repayment period of the loan should be in line with the period of completion of the work. For one to qualify for the loan, they must be a member of a registered company or business. We can also have a cap on the number of tenders which the start-up companies enjoy, after which new start-ups get the privilege.

Climate Change Based Enterprises

The president has been at the forefront of promoting redemption against climate change. The country has had several national holidays dubbed, green holidays, meant to green the country. Such initiatives can be scaled downwards, and the youth establish enterprises that aid in curbing climate change. The youth and the people at the bottom of the pyramid can be assigned an area to plant trees, and given the tender to supply the tree seedlings. The government can then loan them the money to these enterprises to use for growing the trees, and sell the seedlings to the government. The government then recovers its money and gives the profits to the enterprises.