The launch of the Financial Inclusion Fund, also known as the Hustler Fund, is expected to provide easy access to credit, savings, pension and investment products to millions of Kenyans in the bottom of the pyramid market.
With an interest rate of 8 per cent and a repayment period of 14 days, Kenyans will now borrow a minimum of Sh500 and maximum of Sh 50,000 to boost their business and start-ups. Simon Chelugui, the Cabinet Secretary for Cooperatives and Micro Small and Medium Enterprises (MSME) Development noted that the government had disbursed over Sh408 million within the first 24 hours of the launch of the Hustler Fund, with about 600 borrowings per second within moments of the launch.
It will be interesting to see the lessons learnt from this financial inclusion fund, specifically around the fund’s impact on the informal sector enterprises and more importantly, it’s role in improving the livelihoods of the 14.5 million Kenyans employed in the informal sector (according to KNBS Economic Survey, 2021).
It is also important to note that while the Hustler Fund is a first-of-its-kind initiative, there are existing funds — similar to but not same as — that have disbursed funds to youth and women in the informal sector. They are the Youth Enterprise Development Fund (YEDF), Women Enterprise Fund (WEF) and the Uwezo Fund, all of which have been characterised by their fair share of challenges and successes.
For the Hustler Fund to achieve its desired goal, the implementation of this fund must be accompanied by an elaborate and practical financial management training plan that will provide the borrowers with the relevant knowledge and skills they will require to manage the funds.
Studies on African small business owners and start-ups have repeatedly shown that simple financial management training can significantly enhance the short-term financial management competencies of MSME owners, which eventually improves their financial self-efficacy.
To my understanding, the aim of the Hustler Fund goes beyond providing credit and savings options for the bottom of the pyramid market, it is a gateway to financial literacy and financial freedom for this critical mass of the Kenyan population.
Which is why the administrators of the Hustler Fund must not assume that the target market of this fund already know and understand the basics of financial management. We must also not underestimate the value and impact of the amounts borrowed.
Neither should we forget that this will be the first experience with borrowing for many Hustlers. We must ensure that every beneficiary of the Hustler Fund at the very least goes through a training session on prudent management of the funds, including personal finance, basic accounting, financial planning and saving.
Such training does not need to be too complex and theoretical, one just needs to understand the pain points and key challenges of the borrowers at this level and tailor-make a simple and practical training that will help them solve their problems.
The training can then be advanced as the borrower moves up the chain. Indeed, the maxim ‘knowledge is power’ has been more relevant.
Dr Chege is a media and technology researcher.