President William Ruto has finally made his promise of creating a Hustlers’ Fund real. Though the fund is well-intentioned and drifts apart from others before it by introducing credit rating as a way of graduating borrowers for higher loans, it might turn into a poisoned chalice unless Kenyans are taught how to borrow responsibly.

The eight million young people who are said to have been blacklisted by the Credit Reference Bureau (CRB), which the banks use to assess the risk level of their borrowers, is a clear sign that we have a deeper problem than just the high rates being applied by the lenders, which the Hustlers’ Fund seeks to remedy.

The underlying problems must be addressed for the success of the fund.

Conceived at a time of heightened political activities, the fund may have been construed by the unemployed youth to mean what it was not. It is expected to be a revolving fund that might not benefit some of the intended borrowers, largely youth, unless they are sensitized on the overall concept that informed it. Those who are in CRB have borrowed for very flimsy reasons, including betting.

Perhaps the second and third tier of the fund, which will be launched in the coming months, targeting Small and Micro Enterprises (SMEs) would make more sense but the government must also put in place some measures to help the fund achieve its envisaged goals.

The SMEs are not properly anchored in Kenya’s policy framework, which has stifled the sector despite its huge potential to completely change the tide of our economic development.

Kenya can learn from Rwanda which has won accolades globally for policies that have ranked it as the easiest place in Africa to set up and run a business with immense policy support.

To begin with, the government must help the SMEs grow as formal institutions by easing their business registration process, reducing licensing and enhancing compliance with standards.

The government should also address the high cost of energy, high corruption, and high tax regime. It should offer incentives such as tax holidays for bigger investors and lower corporate taxes.

Kenya should put in place investments and an innovation-friendly policy environment, which allows entrepreneurs to test their new products, and business models, before establishing them as taxable businesses. 

Rwanda has done this successfully. It takes only 24 hours, one procedure and just $25 (Sh3,068) to register a company. Only one institution, the Rwanda Development Board has the mandate to facilitate not only the registration of companies but also provide after-care throughout the life of the investment project, serving as a one-stop centre.

South Korea is another learning example. The government has implemented a variety of programmes targeting its young population. The programmes cover financial assistance, entrepreneurship and leadership training, mentoring and internship opportunities among others.

A culture of entrepreneurship and creativity must be infused. This can be done by establishing more incubation centres among the youth spread across the counties in partnership with the devolved units, where all functions have been devolved. Synergies between various line ministries is what Kenyans expect to see.

The government should now provide the 30 per cent access to government procurement opportunities (AGPO) scheme for youth business, which has been in place but remained ineffective because it has been abused.

As the largest economy consumer, the government should be able to provide a market for SMEs.

Also, private sector and development partners must be involved in employment and skills development. The private sector needs to be strongly linked to the education and training systems to meet labour market needs. Companies should be given incentives to offer young people apprenticeships, internships, mentorship and even skills certification programmes.