Get credit appraisal right for Hustler Fund to work

Kenya Kwanza’s Hustler Fund has mutated from a grant to a loan product to now a 10 percent credit facility with a compulsory savings component. FILE PHOTO | NMG

The Hustlers Fund is a good programme that can create jobs for low-income households, but only if well implemented.

In the past, corrupt government officials misappropriated funds meant to uplift the poor because of little to no control.

Similar affirmative action funds, including Uwezo Fund, have over the years choked up massive bad debt, creating a liquidity crisis that has threatened their sustainability.

A lot of borrowers in the past have failed to repay loans extended to them because the awarding agencies failed to put in place strong credit appraisal measures.

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This led to shady entities and unscrupulous individuals taking taxpayers’ money and failing to repay, leading to the collapse of the funds.

For the Hustlers Fund to pass the sustainability test, it must avoid the pitfalls of past programmes. The beneficiaries should understand that the money is not free and will have to be repaid to benefit others.

While a majority of Kenyans online have expressed their displeasure at the loan amounts being offered, it is in general a step in the right direction.

At 8.0 per cent per month, the interest is lower than the latest average bank borrowing cost of 12.38 per cent and annualised M-Shwari charges of 108 per cent.

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However, all these benefits will depend on how the credit appraisal of the beneficiaries will be done and how effective the measures against the misappropriation often associated with State initiatives are.

The need to ensure the Hustler Fund reaches the intended beneficiaries cannot be overemphasised.