Hustler fund is an innovative idea solving multiple problems

Posted byDr. Daniel Mutegi Giti, PhD.Posted inUncategorized

It began with a promise and finally on 30th November 2022, the president launched the Hustler fund that was immediately received with high levels of enthusiasm, given the high number of subscribers to the fund. The fund will address access to cheap and affordable credit, hence undertake effective bottom-up economic transformation agenda. The applicable interest rate is 8 percent per annum that is calculated on pro-rated basis. In addition, once the application is successful, one will receive 95 percent of the applied amount in their mobile wallet while 5 percent of that application will go to the savings scheme that has been introduced under the fund. 70 percent of the 5 percent that is earmarked for savings or pension goes to long term savings scheme, essentially meaning that the applicant has some pension that they can look to into the future. Secondly, 30 percent of the 5 percent of the application amount goes to the short-term savings plan for the applicant. This strategy is a masterstroke for two reasons. One, it addresses the low savings rate in the country. The Kenya National Bureau of Statistics shows that in December 2021, the country’s gross savings rate was 13.3 percent, which was lower than the global average of 24.04 percent, and where the highest country, Singapore had gross saving rate of 44.24 percent, hence its high level of development, while the lowest country in terms of gross savings rate was Namibia, with 6.58 percent.

No country can develop without undertaking substantial domestic resource mobilization strategies, key of which is the savings that citizens can make, which can be utilized in capital projects for the nation for later repayment. Egypt for example built the second phase of Aswan dam using domestic savings and so we can fund mega projects using small savings that comes from such a fund. Suppose 20 million Kenyans borrow on average Ksh. 50,000 which means 5 percent will be 2500, this gives a saving of 50 billion shillings, which can construct 1,666.7 kilometers of roads assuming one kilometer consumes Ksh 30 million. The fact that the savings plan under the fund addresses the pension issue also is welcome because majority of Kenyans, 89.4 percent, have no pension plan and hence have nothing to look up to in retirement, hustler fund can help such people

Published by Dr. Daniel Mutegi Giti, PhD.

I hold a Ph.D. in Urban Management; Master of Urban Management and Post Graduate Diploma in Housing from the University of Nairobi. My Undergraduate was a Geography major and Sociology minor from Egerton University. I am an Assistant Director for Housing - Slum Upgrading, State Department for Housing and Urban Development, within the Ministry of Transport, Infrastructure, Housing, Urban Development and Public works in Kenya. I have hands on experience on matters housing and urban development process in Kenya, including developing skills necessary to tackle the underfunding of housing and urban sectors through innovative financing and greater private sector participation through models like application of Public Private Partnerships (PPPs) in the infrastructure and housing development in Kenya and Africa.

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