Can Ruto's Sh13.6b Nyota youth plan shine?

When he was on the campaign trail, President William Ruto romanticised owners of micro and small enterprises, insisting they would form a key cog in his bottom-up economic model.

He hailed them as small-scale trade hustlers and often cited his own experience as a chicken seller in his youth as an example of the importance of small enterprises.

“We will support the boda boda riders and mama mboga because we want to grow the bottom-up economy,” Ruto repeatedly declared at campaign rallies.

At every turn, however, his Kenya Kwanza administration appears to be failing the hustlers, with the programmes implemented—among them the much-hyped Hustler Fund—seemingly faltering and failing to uplift small businesses.

Now analysts are poking holes in the government’s latest venture, the Nyota (National Youth Opportunities Towards Advancement) programme, which has been criticised for duplicating existing empowerment initiatives while disbursing paltry sums unlikely to make a real impact. The money used to implement the programme is drawn from yet another World Bank loan—something many Kenyans argue the country can ill afford—reviving debate over the sustainability of public debt, which even the National Treasury admits is on the verge of becoming unsustainable.

According to a World Bank brief, the Nyota programme will focus on “increasing employment, earnings opportunities and savings among targeted youth through integrated interventions on skills development, self-employment, entrepreneurship and savings”.

The government will spend Sh5 billion—borrowed from the World Bank—which it says will “support 100,000 young people across the country, with 70 beneficiaries drawn from each of Kenya’s 1,450 wards”.

The component launched last week is the first of four to be rolled out over five years, with the World Bank having agreed to advance Sh13.6 billion for the entire programme.

It is, however, not lost on many observers that despite the seemingly huge amount of money being spent, it will be a paltry amount when it is eventually shared among the 100,000 businesses. Each micro or small enterprise will receive Sh50,000 as a grant—a figure that adds to the growing public debt burden.

Embakasi North MP James Gakuya warned that there is a huge risk the money will go to waste if disbursed before the youth are equipped with proper management skills.

He noted that evaluating beneficiaries and ensuring they already operate viable businesses would ensure value for money.  “If you can give a hawker Sh50,000 who understands his business, that hawker can flourish and grow. If you give that money to a person trying to grow a business, that money will enable them to succeed.

“But if you give this money to a person without a clue as to what to do with the money, especially if they are not business oriented persons, consider it lost money,” he said.

Kenya and the World Bank signed the loan agreement in December 2023 for £91.1 million (Sh13.6 billion) to implement the Nyota programme over five years.

Overall, the project which will be implemented in four components is expected to benefit 800,000 vulnerable youth aged 18-29 across, including 10,000 refugees and 10,000 vulnerable host community members.

The first component that the government has embarked on will be steered by the Ministry of Youth Affairs and targets to disburse the Sh5 billion to 100,000 young people. Subsequent components, according to government documents, will be implemented by the Small Enterprises Authority (MSEA), NSSF and the State Department for Micro, Small and Medium Enterprise Development.

“The taxpayers will ultimately have to repay the World Bank loan. The question is, have we done enough to assess what these beneficiaries are already doing? You cannot just wake up and give someone Sh50,000. There is a real risk the money might go the way of the Hustler Fund,” said Gakuya.

The Hustler Fund, launched soon after Ruto took office, has faced major challenges—chief among them high default rates, with nine million Kenyans reported to have defaulted.

There are also concerns that many borrowers used the money to buy food or meet household needs rather than grow their businesses.

Patrick Muinde, an economist, noted that under President Ruto, the government appears to have little focus on developing the local manufacturing sector and has instead taken to implementing programmes that seem to appeal to the masses, without necessarily being impactful.

“Simply put, the Ruto administration appears indifferent to the fate of industries, so long as it can appeal to unemployed youth through flashy programmes that, at best, help them survive rather than thrive, while leaders consolidate political power and expand private wealth through public resources,” he said. 

He added, “From a policy and technical standpoint, one must ask: What is truly unique about Nyota that its predecessors—the Hustler Fund, Youth Fund, Women Fund, or Uwezo Fund—lacked? What will make youth-led MSMEs under this programme succeed where others failed? Without a solid industrial base or value-added production, these schemes risk becoming short-term political spectacles rather than sustainable economic solutions.”