Over the years, developing countries have time and time again established financing schemes, targeting women, the youth and people with disabilities, to propel and champion for inclusivity and participation from these groups, towards attainment of national socio-economic development goals. This is peculiarly evident during electioneering periods by presidential candidates who seek favor and recommendation amongst the hearts of its citizenry who are in desperate need of financial support. While the pursuit of this objective holds ground, little to no success has been achieved in the funds impact.
In Kenya, the provision of government finance schemes dates as back as 2006, when the Women Enterprise Fund and the Youth Enterprise Fund were established and made operational in 2007. Their purpose was to offer subsidized credit to support women and youth businesses respectively. Currently, the Hustler Fund is scheduled to start operations in December 2022, with a KES 50 billion kitty provision as disbursement. Its predecessor the Youth fund disbursed KES 12.8 billion according to data from its Board Performance Report of June 2016 to May 2019. Notwithstanding the fact that the 50 billion provision is exhilarating and inspires hope to the ‘hustler nation’ in Kenya, there exists a gap that the current administration and its organs collectively need to understand and address. Is a different funding scheme necessary? What exactly happened to the previous funding schemes that show why they were lacking and inefficient in this pursuit? Does the current scheme address these inefficiencies and is it better in terms of feasibility?
Audit reports have demonstrated mismanagement of these funds from internal control weaknesses to corruption cases. Auditor-General Nancy Gathungu’s report on the Uwezo fund for the year ending June 2021 flagged opaqueness in its accessibility and high default rates. Over and above that, very few success stories of the beneficiaries of these funds have been aired, leading to questionability of these government financing schemes.
In retrospect, the governance and politics of government financing schemes have failed to survive successive administrations. Is it a matter of different interests being pursued or not? In addition, the schemes have also showed incompetency in value addition to various economic groups that they sought to target. If this were true, the administration would have taken a different approach; for instance, empowering consulates and embassies to actively promote trade facilitation and foreign direct investment and offering market access linkages to small and medium enterprises seeking to explore the export market.
Way Forward
The soon to be established hustler fund needs a broader perspective rather than being a credit facility if its impact is to be felt across its target audience. Perhaps the “hustler” could use more than just financing, they could also use an accountability partner or a representative, to both train and mentor and/or acknowledge repayment. In so doing, there is room for capacity building for the small and medium enterprises and the probability of the fund’s default rate will be below rates from the other initial funds, warranting its viability. The hustler fund could also facilitate the exploitation of trade agreements such as the East African Community Common Market Protocol and the African Continental Free Trade Area. There stands a chance in value addition and scaling up of exports should this initiative be considered.
Over and above this, the Hustler Fund and probably others to come should champion for the realization of the sustainable development goals that advocate for a better and suitable future for Kenya and the world in general. It should promote ecofriendly businesses through exploring options such as green financing. The fund could also support ministries and map out small and medium enterprises that directly fall under their docket. For example, the fund could support the Ministry of Energy identify small and medium enterprises involved in power production hence enable both actors structure appropriate support packages to the business units thereby improving efficiency and effectiveness. Government financing schemes have the ability to positively transform societies only if proper structures grounded upon national values, ethics and professionalism can be established.
Good piece!
Thanks, Nguyo! Much appreciated