From Hustler to Nyota: Why unemployment crisis among youth remains a headache for Ruto

Last month, the government launched a Sh5 billion Nyota Project (National Youth Opportunities Towards Advancement), a five-year initiative funded by the World Bank and the government of Kenya, aimed at empowering the youth.

The program includes skills training in specific trades and provision of a Sh50,000 grant to empower the youth to start small businesses. 

This is despite the fact that the Youth Enterprise Development Fund (Youth Fund), a government agency legally mandated to serve the youth, does the same in a more regularised, efficient, tried and tested method.

The similarity between Nyota and the Youth Fund is mind-blowing. 

 Both aim to empower youth by providing both financial support and requiring youth to undergo skills training. They each target unemployed youth to encourage entrepreneurship through income-generating activities. Both programs have central involvement of the government, through ministries, and they focus on youth aged between 18 and 35 years.

Unlike Nyota, the Youth Fund was established in June 2006 through Legal Notice No. 167 of 2006. It was transformed into a State Corporation under the State Corporations Act on May 11, 2007 to address youth unemployment,t starting with an initial seed capital of about Sh 1 billion in 2006. Ironically, for the financial year starting July 2024, under President Ruto, the National Treasury’s allocation to the Youth Fund was paltry Sh225 million, a reduction of 55 per cent from the previous year's allocation of Sh500.08 million. The Nyota Project has a Sh5 billion budget.

Another project launched by President Ruto that duplicated the role of state agencies like the Youth Fund and, Women Empowerment Fund is the Hustle Fund. A new report launched in August by the Kenya Human Rights Commission described the Hustler Fund, “...more of a political tool than a financial solution. There is a growing perception that the Fund is a political reward for voting, and therefore repayment is optional,” the report states.

The report, “Failing the Hustlers,” concludes that the Hustler Fund is structurally unsound, economically unsustainable, and politically manipulated, and recommends that the government scrap it.

Launched in November 2022, Hustler Fund has disbursed Sh65.7 billion in loans to approximately 26 million Kenyans. The loans range between Sh500 and Sh1,000 for first-time borrowers, were too small to start or grow any meaningful business. Borrowers were given just 14 days to repay, a window KHRC deems unrealistic.

Hustler Fund’s default rate is at 68.3 per cent, and KHRC calculates that for every Sh500 disbursed, Sh340 is effectively lost. “This is not financial empowerment. It is a loss-making scheme disguised as progress,” the KHRC said in the report, adding that, “Some reasons for the high default rate include the loans being used for consumption rather than income-generating purposes and structural deficiencies in the fund itself.” Unemployment amongst the youth is at alarming levels.

In Kenya, the unemployment rate is estimated to be around 5.4% to 7.2% in 2025, according to the Kenya National Bureau of Statistics (KNBS) and World Bank data report about 5.4% as the general unemployment rate in 2024, with projections around 5.2% to 7.23% in 2025.

However, according to the Federation of Kenya Employers, unemployment in Kenya is at 12.7 per cent. Youth (15 – 34 year olds), who form 35 per cent of the Kenyan population, have the highest unemployment rate of 67 per cent.

Prof Gitile Naituli, political analyst, says there must be a structured and procedural way for money to be given to the youth. He says the money being given to ministries directly to give handouts to the youth is not about the youth welfare but an avenue to create a looting loophole. He suggests the money is given to banks so that they can give loans to the people at an interest which will build the economy. “Handouts have never been a recognised basis for empowering anyone, let alone the youth. They get people to come cheer them at rallies and give them a few thousand. That is not empowerment,” says Prof Naituli.  He adds that by giving gifts and handouts to youth in the guise of empowerment, the government is demeaning its citizens.

Economics experts Prof XN Iraki says the success rate of starting a business with a grant much lower than when one starts a business using borrowed money or loans, “When you are going to borrow money, you have a business plan, you know exactly what you want to do, you know the risks, and probably you have the skills, and maybe partners. You have done research about the business environment and so on. But when you are given a grant, you are taking money because it's available”

He says businesses that grow organically usually tend to succeed more than those with a grant capital.

“Because once a business grows organically, you learn by doing. You go through the learning curve. You make mistakes. You know how to take risks. You know how to study the environment. Look at all over the world, some of the most successful businesses have grown organically. So my suggestion is that businesses should grow organically. It's just like a child.

You cannot escape certain stages in childhood. If you skip some steps, you probably have problems in life.So let businesses grow organically. They should not be forced by the presence of money.”