Irony of Hustler Fund as State executes budget cuts for supplies

But before I dissect the economic implications of each of the propositions and their Siamese relationship, let us define three important questions. One, assuming the Hustler Fund is the magic bullet, is its architecture definitively different to make it succeed where her elder siblings - Youth, Women and Uwezo funds - have failed? What innovations, if any, does it bring to the table that make it truly transformative as it is marketed to be? Two, does the fund effectively consolidate other existing funds and hence implies their natural death?

Three, do the proposed austerity measures correctly address the real problem bedeviling the economy? Is it possible to stimulate the economy by withholding business on the one hand and redistributing the supposed savings through an experimental bureaucratic practice on the other?

No smoking gun

Unfortunately, after going through the draft Public Finance Management (Financial Inclusion) Regulation, 2022 (both the version published on print media and the detailed draft posted on Treasury website), I have found no evidence of any new thinking outside her cousins before it. For specificity, there are obvious pointers to the fact that it serves the tragic political ends for which Uwezo Fund suffered from. Instead of building on the existing infrastructure for the Youth and Women funds, the designers of Uwezo Fund opted for a complete new outfit.

As per the budget allocations of 2022/23, it is clear there has been a deliberate effort to divest from these funds. The Financial Inclusion regulations of 2022 identify this duplicity and fragmentation of goals as their niche and innovation away from those other funds. While not exclusively stated, the regulations leave no ambiguity that the Hustler government is definitively divesting from the three existing funds. In their view, the Hustler Fund is more transformative and prioritises real hustlers. But is this true?

A maindi choma vendor captured along Ngong Road on November 19, 2022. [Elvis Ogina,Standard]

In my view, innovative side of the fund is the proposed subsidised loan facilities to existing commercial and financial institutions for on-ward lending to the MSMEs. The idea of a more competitive interest if the financial institution matches funding with own resources will significantly boost available pooled funds for the hustler agenda.

Checkmate

From where I stand, the austerity measures proposed by the Treasury are counterproductive to the objectives of the Hustler Fund. The target Sh300 billion savings is from budget cuts of supplies and services in categories largely procured by the government from MSMEs, youth, women and other special interest groups. Cutting domestic travels by 75 per cent, training and advertising budgets by 100 per cent will have debiltating effects to the hospitality and media sectors value chains.

My concluding thought and unsolicitated advisory to the hustler nation is this: it is well acknowledged this country loses at least Sh800 billion of her budget to corruption and official waste annually. Decisive and conclusive measures to seal this leakage are enough to open a fiscal space to stabilise this nation from her current economic turbulence. Only that way shall you be able to appease and give the hustlers who fully supported you a reason to believe in your recovery and transformation agenda.

Dr Muinde is a Development Economist