It is close to four months since the launch of the Hustler Fund that came with pomp.
That excitement is dying down which could mean either the Fund is off to a good start and is now business as usual or performance is dismal and the Government is hesitant to share updates.
The government has come out strongly to solicit correction in place of “praise” to put it on track. It is in this spirit that I examine the fund as designed.
The Financial Inclusion Fund Regulations 2022 was a good place to anchor this proposition. Although relevant given the economic status of those at the bottom of the pyramid, it may not have been tested for rigour.
That which needs scrutiny is the overarching strategy, operational astuteness, risk assessment and mitigation to protect the lender (read the taxpayer).
Some questions that arise are what happens if a “hustler” fails to service the facility, the treatment of non-performing loans (NPLs) and what the product developers conceived as the cushioning measures from shocks arising from an unprecedented economic downturn that could occasion unpredictable income flows.
Where does the accountability on the success or failure of this venture sit?
Credit scoring including debt ratio analysis is a key determinant to lending. Also critical is a business plan for which the funds are sought and are to be applied especially where the collateral is waived as a requirement.
This leads one to ask how the Hustler Fund was modelled to work, what and how the success of this offering was to look like to the “hustler” borrower, the fund manager, the government, the taxpayer and the country at large.
Prudence demands that the strategic objective for which this fund was set up is not only qualified but quantified to ensure tangible value addition, impact and sustainability.
It is not prudent to focus on the uptake only without assessing the rate of repayment unless the metric for public programmes is social and not financial.
But should the government do business and compete with commercial enterprises? On this, the jury is still out.
In the absence of scientific research and empirical findings, the government cannot purport to know the dynamics of running the hustler enterprise, be they boda bodas, mama mboga, jua kali artisans, factory workers or day labourers.
It is expected that the “Hustler Nation” business enterprises will contribute to economic development upon creating access to capital to make labour more productive. Only time will tell if indeed these are not sunk funds.
The Hustler Fund strategic plan is also fuzzy and the devil being in the detail makes it pertinent for custodians of the scheme to make the plan public.
What principles did the drafters of the idea ride on to bring it into operation? How are the products classified, what market segments do they serve and what is the graduation procedure?
When and where do conventional banks plug in if at all? New thinking will be needed to deliver this campaign promise.
The writer is CEO of Shajuls Consulting Rowa.