Sharp Daily
No Result
View All Result
Monday, June 2, 2025
  • Home
  • News
    • Politics
  • Business
    • Banking
  • Investments
  • Technology
  • Startups
  • Real Estate
  • Features
  • Appointments
  • About Us
    • Meet The Team
Sharp Daily
  • Home
  • News
    • Politics
  • Business
    • Banking
  • Investments
  • Technology
  • Startups
  • Real Estate
  • Features
  • Appointments
  • About Us
    • Meet The Team
No Result
View All Result
Sharp Daily
No Result
View All Result
Home News

Hustler Fund Set To Lose Ksh22 Billion In Costs Every Year

Edwin H. Dande by Edwin H. Dande
December 7, 2022
in News
Reading Time: 2 mins read
Hustler Fund

Hustler Fund [Photo/Courtesy]

With a cumulative of Ksh50 billion in the basket, President William Ruto’s Hustler Fund looks like the saviour for small-scale traders and Kenyans in the lower cadre of the social class.On the other hand, I can describe it as a political debt that had to be settled, but certainly unsustainable as an economic concept, costing 51% for an 8% return.

In trying to analyze whether the Hustler Fund is sustainable, as always I looked at the data. The most relevant metric here is the cost of the fund to the government versus the 8% it’s getting back.

1. Cost of bad loans:

The biggest cost for the Hustler Fund is going to be default rates as a government-sponsored special fund. The average default rate for government-sponsored special funds is 40%. Uwezo Fund’s default rate is about 64%, Women Enterprise Fund is 6.7%, and Youth Enterprise fund is 48%, a simple average is about 40%. Put simply, for every 100 bob lent out, they will lose 40 bob, but you can put in your own assumption for the cost of bad loans.

RELATEDPOSTS

Parliament

Lawmakers call for comprehensive list of Hustler Fund defaulters

October 2, 2024

Govt expands Hustler Fund to bolster small business financing

September 26, 2024

2. Cost of operations:

The cost of operating a retail fund is at best 2%. Put simply, for every Ksh10 lent out, they will use Ksh2 for administration.

3. Cost of the money:

The cost of short-term borrowing for the government, the 91-day t-bill is about 9%. Put simply, for every Ksh100 lent, they will use Ksh9 to source the funds.

If you add up the cost of credit of 40% (or whatever number you want to assume), plus the 2% administration cost and the 9% cost of money, you are getting to a total cost of 51%.

So the government is getting money at a total cost of 51% and lending it out at a total interest of 8%, hence a net loss of 43% for every shilling lent. That means, for the Ksh50 billion per year to the Hustler Fund, they will lose Ksh22 billion every year.

That is not a sustainable model, hence my view is that its just a populist but unsustainable model. It seems like it was simply paying back the hustlers for their vote. It was settling a political debt.

Even if it was a sustainable idea, which it is not, the total loan market is about Ksh3.6 trillion. So even putting Ksh50 billion into the economy is just 1.4% of the loan market, with hardly any impact.

The point is, obviously the Hustler Fund is not sustainable, it will dissipate soon, like hot air. It was a political debt that had to be paid, and its important to settle political debts.

But now that the political debt of the hustler vote has been settled, the government should turn to address the serious credit problem in Kenya – credit is hard to access and when accessed it’s very expensive, especially for hustlers.

Edwin H. Dande is the CEO of Cytonn Investments and a senior analyst with The Sharp Daily

Email your news TIPS to editor@thesharpdaily.com

Previous Post

3.5 Million Kenyan Children To Miss School In January 2023 As Drought Worsens

Next Post

Time Has Come To Free Argentina From Lionel Messi

Edwin H. Dande

Edwin H. Dande

Chief Executive Officer at Cytonn Investments

Related Posts

News

Co-op Bank posts KES 6.9 billion profit in Q1’2025

May 16, 2025
Agriculture And Economy
News

Lets get Kenya out of FATF list

May 9, 2025
News

The downside of Impact Investing

May 2, 2025
News

Leadership challenges at the University of Nairobi

April 24, 2025
News

Easter eggs and earnings: Growing your nest egg with CMMF

April 16, 2025
News

Geoffrey Ruku declares KES 377M net worth during CS vetting

April 15, 2025

LATEST STORIES

Best investments for Kenyan seniors: Secure, predictable & low-risk

May 30, 2025

Why June is the Secret Sweet Spot for Travel

May 30, 2025

Strategies to elevate more women to corporate leadership

May 30, 2025

Tap on Kenya’s 2025 tech revolution

May 30, 2025

How CURBS supports employers and employees

May 30, 2025

NSE deserves more attention from young investors

May 29, 2025

The silent strain of remote work on Kenya’s urban workforce

May 29, 2025

How Kenya’s crypto bill could reshape the digital economy

May 29, 2025
  • About Us
  • Meet The Team
  • Careers
  • Privacy Policy
  • Terms and Conditions
Email us: editor@thesharpdaily.com

Sharp Daily © 2024

No Result
View All Result
  • Home
  • News
    • Politics
  • Business
    • Banking
  • Investments
  • Technology
  • Startups
  • Real Estate
  • Features
  • Appointments
  • About Us
    • Meet The Team

Sharp Daily © 2024