Debating Ideas aims to reflect the values and editorial ethos of the African Arguments book series, publishing engaged, often radical, scholarship, original and activist writing from within the African continent and beyond. It offers debates and engagements, contexts and controversies, and reviews and responses flowing from the African Arguments books.

The piece inspired us to use this Stanford published title by Deborah James, a member of the IAI advisory board.

A so-called ‘hustlers’ narrative, clothed in the language of ‘bottom-up approach’, was central to the recent political campaigns and the manifesto of the newly elected Kenya government. It continues to feature prominently in their public speeches since their assumption into top office. The term ‘hustler’ draws from what the new Kenya president, Dr William Ruto, considers as his personal life of growing up in a family of extremely modest means, not well-connected and surrounded by informal economic activities to make ends meet, a reflection he believes resonates with the lives of poor Kenyans faced with economic hardships. The ‘hustler’ narrative was coined to speak to these many Kenyans who are engaged mostly in informal economic activities rather than employed in the formal sector. These Kenyans, forming the majority of the population (85% according to the Kenya Kwanza manifesto), are perceived to be at the bottom of the economic pyramid, and seen as having entrepreneurial potential, but remain poor and excluded in the face of mushrooming unemployment, marginalisation, high poverty rates and the high cost of living. Indeed, the 2020 Kenya National Bureau of Statistics Comprehensive Poverty Report documents that 15.9 million Kenyans are poor, with youth unemployment estimated at 38.9%. Meanwhile, the African Development Bank and a wide range of scholarship have noted that many Kenyans are living in precarious, highly volatile and vulnerable conditions. Many slithers of the middle classes, according to research, are at risk of downward mobility or even ‘sliding back into poverty’, yet they bear the burden of responsibilities for many less privileged dependents, both kin and friends.

Speaking to Kenyans who ‘hustle’ in the informal economy, the new Kenya government is, however, pursuing a series of social protection and financial inclusion interventions. These, the government believes, will address the underlying problems facing the ‘hustler’ economy. The most prominent of these interventions is the government’s attempt to ease access to credit. According to the president, credit is ‘a magic formula’ that will stir economic growth among ‘hustlers’ and feed into the broader government agenda of national transformation. A range of efforts have been made – from advising lenders against blacklisting of debtors, to calls for credit scoring systems and successfully convincing the country’s giant mobile money network Safaricom to reduce lending rates (by about 40%) at its credit platforms Fuliza and M-shwari. So far, the government is keen on ensuring that access to credit at reasonable cost becomes easier for ordinary Kenyans than ever before. The move is amplified by the introduction of what the government terms ‘Hustler Fund’, 50 billion Kenya Shillings – US$419 million – every year under the new Ministry of Cooperatives and MSMEs (Micro, Small and Medium Enterprises) Development. The ‘Hustler’ fund (also known as The Financial Inclusion Fund), rolled out on 30 November 2022, aims to provide loans – between Kshs. 500 and Kshs. 50,000 (around US$4–400) – to ‘hustlers’ to invest in their activities. The fund will be accessible digitally through a lending app and interest rates are capped at 8% annually. The president and his deputy have assured Kenyan citizens that the ‘Hustler’ fund will ‘lift millions out of biting poverty’.

The government’s move to enhance ‘hustlers’ access to credit has been viewed as a possible ‘game changer’ of Kenya’s economic growth and development. Indeed, research shows that the informal economy is central to the country’s economic transformation and millions of ordinary citizens depend on it for their livelihoods. However, while credit is seen to be a motivation for entrepreneurialism and risk-taking that would enhance the poor’s economic condition through giving people capital to expand or diversify their hustling activities, it is important to understand the context in which the new push for credit intervention occurs.

The credit and debt situation in Kenya

Research has reported that a majority of ordinary Kenyans are in debt, a perpetual debt to be precise. This situation is as a result of, first, the proliferation of digital lending apps by fintech companies such as Tala and Branch, and mobile money technologies such as Safaricom’s M-shwari, Fuliza and Okoa Jahazi that have made credit easily available. Second, digital loans have become attractive and the easiest means through which millions of Kenyans cope with everyday financial burdens such as medical costs, school fees, rent, and food, both for themselves, kin and friends. Third, digital technologies such as M-Pesa, WhatsApp and M-Tiba have become a platform where millions of Kenyans are forced to join crowdfunding solidarities/networks of kin and friends to meet demanding financial needs towards weddings, healthcare and funerals. From the working poor to the salaried and middle classes, the debt economy and the circumstances surrounding it have become an everyday reality. Many people, often in an extremely precarious financial position, find themselves struggling to repay a cycle of both digital and non-digital based debts, many of which come with exorbitant costs. This is further compounded by the state of public services with millions of Kenyans financing healthcare and education which ought to be publicly financed. My research on the country’s national health insurance (National Hospital Insurance Fund, NHIF) reveals the burden of healthcare costs for many Kenyans due to complexities and failures of the health insurer, and the struggling and poorly financed public health system.

The provision of credit through the ‘hustler’ fund, therefore, joins a flood of credit facilities that are already making claims on the future labour of millions of ordinary Kenyans. As research shows, digital lending technology through mobile apps is both enslaving and colonizing (subjugating/taking control of) the future of many Kenyans. The stress over their inability to pay these loans has created a volatile environment where people have mortgaged their future income. This situation entails a heady mix of crises such as high costs of living – food, healthcare, fuel, rent, education – and the poor’s ever growing dependence on already personal networks. The terrain has become what anthropologists Kevin Donovan and Emma Park term a ‘zero-balance economy’, whereby people are compelled to borrow against their low and irregular incomes and existing debts as they must make ends meet for themselves, their dependents, friends and strangers.

Credit or public services?

This situation of large-scale and out-of-control indebtedness should prompt the government to rethink its approach to entrepreneurship as key to national development and poverty alleviation. The government’s move to ease access to credit may open up some opportunities for some people in the short term. However, easing access to credit, which many Kenyans end up using to pay for basic necessities, while financing public services, merely shifts responsibility onto individuals, many of whom will not be able to cope and may sink further into debt. Romanticising the relationship between credit, entrepreneurship and development in the current Kenya context is false hope for the country’s poor. It suggests the government understands the problems of millions of Kenyans in a narrow way and masks the real broader public issues facing many Kenyan citizens. Kenya is already experiencing the fastest inflation in five years with high unemployment, climate crisis and increasing rates of chronic diseases such as cancer. Ruth Prince and I have documented the frustrations, disappointments and debates triggered by failed public healthcare reforms. The Covid-19 pandemic along with drought and famine have already revealed the need for truly substantive and universal public services. Provision of credit by the government or a more accessible credit environment will not prevent people from being trapped in the web of indebtedness if the government does not invest in public services.

Conclusion

Writing in the context of South Africa, Deborah James shows how a national project focused on financial inclusion by extending access to credit to black South Africans failed to address economic disenfranchisement, poverty and oppression, but rather produced new forms of these and created further indebtedness. Providing easy access to credit is not going to pull people out of poverty, but just create further debt.If the new Kenyan government truly intends to provide a decent living to ordinary Kenyans, and pursue a truly national transformative process, then provision of universal and guaranteed public services, as envisioned in Kenya’s constitution, is crucial. This requires that the government ensures that every citizen, regardless of their background and socio-economic status, is able to access the basics of life, including affordable healthcare, education, housing and food. Investment in public services is possible if the government takes seriously efficiency in revenue generation through taxes and efficiency in expenditures by addressing revenue leakages and expenditure wastages arising especially from development projects. The Covid-19 pandemic manifested the need for robust public services such as a strong and working public health system. The new government needs to take heed of such lessons if Kenya is to attain any national transformation.