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Hustler fund good idea but needs policy support

Cabinet Secretary for Cooperatives and Micro and Small Enterprise Simon Chelugui during address the press on the Hustler Fund at his NSSF offices, in Nairobi. [Elvis Ogina, Standard]

The Hustler Fund is a good idea. Research shows that lack of access to credit is an important barrier to both entry into small-scale business opportunities and survival as a young business.

The 500 to 50,000 shillings may not seem much to the well-to-do Kenyans, but on a typical morning such a loan might be the difference between being able fuel a motorcycle or not or go to Marikiti to stock up on a supply of cabbages.

The Hustler Fund also faces real risks.

Existing evidence suggests that programmes like this succeed when coupled with sustained training and coaching of entrepreneurs as well as conscious government effort to address emerging regulatory/policy bottlenecks.

What is the point of being able to easily access a loan and then have to pay a large chunk of it to the government for licenses and bribes?

Which is to say that the government should not imagine that merely throwing money at people will fix the problem of under or unemployment.

Small businesses typically have very slim margins, with a disproportionate share of them failing.

While some businesses will likely succeed and grow into proper job creating outfits, we cannot rely on the Hustler Fund as our primary means of doing good by our youth.

The government’s challenge will be to ensure that it does everything it can to increase the survival rate of Hustler Fund businesses.

More broadly, a real policy opportunity for the government, if it is serious about job creation, would be to focus on medium and large businesses.

Entrepreneurship is risky business and not every Kenyan can entrepreneur their way out of unemployment and poverty.

We therefore need lots and lots of successful medium and large businesses that create sustainable jobs.

For that to happen, we need a government that is invested in businesses’ success.

Without jobs in the so-called “formal sector” across multiple industries, we will continue to condemn millions of our people to poverty (whether we have a Hustler Fund).

 The writer is an Assistant Professor at Georgetown University