Hustlernomics has missed the mark and dims country's economic future

Imagine for a moment you were an investor with a disposable capital of say Sh500 million and seeking out a share of the East Africa Community’s estimated 302 million people. Would Kenya be on the cards as your preferred investment destination? The ongoing political shenanigans and noise over multi-billion controversial contracts suspected fraudulent across key sectors of the economy are extremely toxic for an investment climate.

At what point did the bottom-up transformation, which was sold as the remedy to alleviate the suffering of those holding lowly jobs in the economy, translate into the fleecing of a working poor middle class? All this is to align the pockets of well-connected wheeler dealers in the Kenya Kwanza (KK) administration.

But didn’t we all foresee this coming? Shortly after the hustlernomics manifesto was made public, I opined in this column that it was not only vague and lacking in specificity, but one could not miss out on the sole voice of a single individual who authored it. This implied that it was never a shared and collective ideology for the politicians affiliated with the UDA party. To them, it was a means to an end.

Now that it has since evolved into the Bottom-Up Economic Transformation Agenda (Beta), it appears that it is in the digital transformation component, where those with access to power have found the valve to drain the economy. Further, it remains a mystery why all the key programmes of the KK administration have been crafted as completely new ventures, instead of riding on and reforming existing government infrastructure and systems.

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Two years into the KK administration, government revenues for August 2024 declined by an estimated 5.4 per cent compared to a similar period in 2023.

This week, The Standard reported that the economy slowed down in Quarter two, dimming job prospects for the young populace in the country. This is evidentially an outcome of the Gen Z wave of protest against bad policies and oppressive taxes of the administration. But let us now look at the trail of the administration’s signature programs to understand what is going on within the economy.

First was the Hustler Fund designed to run on a digital mobile-based platform. By overlooking the pre-existing infrastructure, experience and lessons learned from the Youth, Women and Uwezo funds, the KK policymakers presumed a digital platform to compete with other mobile-based lending programs was the solution.

Twenty-two months after it was launched with pomp and all the State machinery, the fund is going down after haemorrhaging an estimated Sh11 billion in loan defaults.

The new Treasury Cabinet Secretary, John Mbadi, is threatening to use M-pesa accounts of defaulters to recover the lost money. This is despite the risk of trespassing into citizens' data privacy protections.

Yet, to initiate the fund, the State abused its executive privileges to force financial institutions to withdraw defaulters from negative credit ratings.

To this date, the Hustler Fund remains a very bad economic policy and populist politics. It is worth noting how the fanfare around it has fizzled out in official speeches and public forums. As predicted, the chickens have finally come home to roost.

Second is the doomed reforms of the country’s education system and its financing models. Right from the onset, it has been evidentially clear that the country was not ready and could not afford the Competency-Based Curriculum. The delaying tactics under the Professor Munavu led task-force are proving to be a costly misadventure. The courts have finally put a halt into the University funding model, exposing the daunting challenges in the implementation of the recommendations of the task force. The challenges in the junior secondary schools continue to be a stench the Ministry of Education seems helpless to end. This is even though thousands of learners shall never have another chance to repeat the quality learning that ought to be happening at this stage in their lives.

Third is the centralisation of government payment services through the e-citizen platform. At the time of writing this article, there was information that revenue collection through the platform has risen from about Sh26 million to over Sh100 million a day. What this data fails to acknowledge is that the centralisation of collections does not automatically translate into improved efficiency or effectiveness. These revenues had already been collected directly by various state agencies. It is thus more of a recording/accounting thing as opposed to effectiveness. Furthermore, the private ownership of the platform and the reconciliation of revenues collected cast a shadow of doubt on its true value to the citizen’s socio-economic welfare. The Auditor general has raised these questions in her audit reports.

Fourth is the affordable housing program and the related distasteful housing levy. To this date, the citizens who are meant to buy the very houses have no clue on how the contractors are selected, who they are, how houses built on public land will ever be transferred to private ownership nor on what basis are houses built with their taxes are sold back to them by the government. This one will in the fullness of time or when KK exits from power prove to be a messy venture. The National Housing Corporation is already stranded with houses worth billions that they cannot sell nor review rental prices due to a depressed housing market.  

Fifth is the controversy and the astounding cost of the social health program. A day after the program started rolling out, thousands of National Hospital Insurance Fund (NHIF)members received confirmation short messages that they had successfully been migrated into the Social Health Authority (SHA) database. This implies that NHIF had a robust system that could easily have been upgraded on a need basis. Yet, we are told the system developers will walk home with a whopping Sh104 billion. But for what? Does lining more billions and designing such a costly system miraculously take away the outright plunder associated with the disgraced NHIF?

James Proctor of Inteo Group in an article on digital transformation versus Business Process Re-engineering (BPR) posted on July 19, 2024, asserts that the Holy Grail of a digital transformation is to enable highly personalized customer relationships. To achieve this, it requires an ability to rapidly identify and respond to changes in customer needs, requirements and expectations in terms of products, services, support and level and type of engagement with customers. Can this be said of the messy health cover transition witnessed this past week?

On the other hand, BPR refers to a radical transformation of organisational effectiveness and operational efficiency by identifying and streamlining rules and procedures for work before automating only what works. Simply put, computerizing defective work-based rules and procedures does not amount to digital transformation. A true digital transformation must be preceded by organisational reforms, re-tooling of the human capital, obliteration of obsolete rules and procedures and effectively managing the ensuing change for it to achieve its intended goals.

Therefore, going by the trail of the KK programmes, it would appear the Holy Grail in the vocabulary of their digital transformation is the billions of shillings that they can align to their private pockets.