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Why most borrowers won't put hustler money into businesses

President William Ruto launched the Hustler Fund on November 30, 2022. [Wilberforce Okwiri, Standard]

The now-popular Hustler Fund was a good campaign strategy, but there are reasons it might fail to work for the majority of Kenyans. A tax policy that would give every citizen more purchasing power could have been a better post-election initiative. As such, most Kenyans who are borrowing from the kitty, regardless of the communicated measures and threats to the loan defaulters, are spending the money on consumption because man must live.

Motivational speakers tell us that you only lend money you do not expect back—if the borrowers repay, you are lucky, and if they do not, you lose nothing.

President William Ruto launched the Hustler Fund on November 30, 2022. Since then, we have had many stories from borrowers. Nevertheless, there is one story of Faith Rosalina Kibagendi from Kayole who used the money to buy her child meat. She said that since her daughter came to Earth, she has never tasted meat. But, then, Hustler's loan 'Kaboom!' She, at last, had money to put meat on the table. This is a story of a loving mother who needed meat for her daughter, not an investment.

Moreover, forcing people to save will not work because economists will say: 'Saving is that part of disposable income which is not spent on consumption.” According to the Oxford English Dictionary, disposable income is "income remaining after deduction of taxes and social security charges, available to be spent or saved as one wishes." For a hustler, this amount is the 95 per cent they receive for their use after deductions.

Has anyone found out the reasons why 4.2 million Kenyan load defaulters were listed on Credit Reference Bureau? The majority of them are not necessarily 'wakoras'. It is only that they borrowed the money for consumption. I, therefore, have a question. If Kenyans could not repay the loans, they borrowed from mobile money lenders who put stringent social measures of even calling the borrowers relatives, how do you expect them to refund the money you promised them while campaigning?

First, we must accept that entrepreneurship is one of the many ways of life for hustlers. The immediate need of hustlers is buying power, which the high cost of consumer goods has taken away. A Chinese philosopher Lao Tzu advises: "Give a man a fish, and you feed him for a day. Teach him how to fish, and you feed him for a lifetime."

On this, the Hustler Fund is doing neither of these. It is giving a man fish, not to eat but to sell, get the profit and repeat the process until they can establish themselves. Giving hustlers fish to start fish-mongering might not work.

Did Ruto's government foresee such consumer behaviour? If they did, what they should have done was separate the wheat and the chaff in the first stages of the lending. Unfortunately, now it means that in a few months, most of the hustlers will not be qualified to borrow.

That is what Orange Democratic Movement Secretary General Edwin Sifuna, who advised Kenyans not to repay the money they borrowed from Hustler Fund, did not contemplate. The possibility of citizens passing the integrity test, good conduct, and their overall relationship with the government could depend on this indulgence. Therefore, citizens should be careful when mishandling the hustler money because it could be worse than CRB listing.

Therefore, just as Kenyans might not bother repaying the loans, Sifuna does not care about the outcome, provided the campaign is stalled. It is a reason we must engage objective reasoning on the fund. People who live borrowed lives might not care about penalties. Hustler's government must shift quickly and find better solutions to put money in the pockets of Kenyans, and there is no better way than adopting a taxation policy that will boost people's buying power.

Dr Ndonye is a senior lecturer in the School of Music and Media at Kabarak University