Hustler Fund, e-Citizen: Stop denials and embrace honest conversations

To say that Kenyans have been in a better mood than usual in the past fortnight might have everything to do with the continuing heroics of Harambee Stars, our national men’s football team, at the ongoing African Nations Championship (CHAN).  And it isn’t just the team’s performance, incredible as it has been; it’s long-held feelings around our promise and potential as a nation. 

In truth, CHAN has offered us a dose of relief from the daily drudgery of zero-sum politics, leadership by bluster and government by blunder in tough economic times. The fear is this relief is temporary, and we may soon be back to mistreating soccer the way we mistreat agriculture — all fast deals and quick fixes; no sustainable solutions.  Let’s watch this space closely.

One of the ways we begin to realise our promise and potential is through open dialogue and honest conversations. For some reason, we refuse to get there. We have perfected the “if you are not with us, you are against us” attitude. This siege mentality is prevalent in the current administration given to anger, disdain and denial in response to critique. Both inside and outside our politics.

Let’s take the past week and a couple of interesting reports that emerged in the public domain. 

The first was a report on the Hustler Fund published by the Kenya Human Right Commission (KHRC). Under the no-holds-barred title “Failing the Hustlers:  Hustler Fund as a grand political gimmick disguised as economic empowerment”, the report offers a scathing assessment of one of Kenya Kwanza administration’s pet projects. 

Loan sizes are too small to start or grow business. Repayment (period) terms are unrealistic. Disbursements do not reflect actual needs.  Default rates are off the charts, as are actual costs to the taxpayer. Before we get to governance, “the statistics point us to an economic sinkhole”.

To cap it all, we learn that the Hustler Fund performed far worse on repayments than the threesome of Women’s Enterprise, Uwezo and Youth Enterprise Development funds we are now scrambling to merge into a single fund to improve their own loan performance and impact!

After observing that even the Office of the Auditor-General was unable to render an opinion owing to missing documents and unsupported transactions, as well as a lack of information transparency, the report’s conclusion is simple: the Hustler Fund can neither be fixed nor reformed, is unfit for continuation and must therefore be scrapped.

As expected, our media was quick to pick up on the money side of the report’s highlights. And, as certainly as night follows day, we got the “if you are not with us, you are against us” responses ranging from the presidency to all manner of government nabobs and political nawabs.

In true “dialogue of the deaf” fashion, these official responses oscillated between denying data and alternative numbers without going to the conclusions the report title bravely suggests. This is where we miss the conversation that should really happen.  Instead of this “he said, she said” engagement we find ourselves in, we might have questions for both sides of the argument.

Having read the report, an immediate question concerns the highly-publicised loan default rate and cost to the taxpayer. It is based on the first month of Hustler Fund transactions, when the Fund is itself approaching its three year anniversary in four months. Poor record keeping by the Fund might have forced interim conclusions, but this leaves us with answers looking for questions.

On the other hand, defensive official responses fail to acknowledge the real problems, particularly on the governance side, that the report highlights. It is clear that the Fund has real issues with transparency, and therefore, accountability, and it doesn’t matter who funded this KHRC report.

A proper dialogue might ask: What’s worked/working - What’s isn’t/hasn’t - What next? The question for me is if we missed the chance to create a multi-purpose platform, not a money fund, for Inclusive Financialization (economic ladder) not just Financial Inclusion (economic safety net).

Speaking of platforms, let’s go to the second report, the Office of the Auditor-General’s (OAG) Special Report on the Government Digital Payments (GDP) platform we call e-Citizen. This is not the first OAG report on e-Citizen; the annual financial audit covers it as part of their overall revenue accountability audit that also covers tax and debt.  So what does this Special Report say?

Well, e-Citizen is not backed by law. Its governance framework is sketchy to opaque. It runs without standard operating procedures. The external financial service providers supporting it don’t have service level agreements. Actually, it’s not even clear who owns and controls e-Citizen. Your personal and secret e-Citizen data is neither private nor secure. The platform’s business continuity default is pretty much zero, as in, high risk of loss, not recovery, from failure.

And that’s just the structural and design – or set-up – side of e-citizen!  When the OAG delved into its actual implementation (operational running) they found more. Irregular payments to the service providers (who, remember, do not have service level agreements).

Unauthorised diversions of revenue and transfers from the 222222 paybill. Unapproved revenue collection and settlement accounts (interim accounts before money collected actually gets back to the MDAs whose services you are paying for). Irregular collection of the convenience fee, which was never approved at Sh50. Oh, and we apparently have two payment gateways – pre and post-2022!

Again, as expected, media picked the money side of the report’s highlights. Apparently, so did Parliament, who summoned Treasury, Interior (Citizen Services) and ICT Principal Secretaries to explain matters. This time, a different rabbit was pulled out of the hat - “no money has been lost”. With an important qualifier – “since 2023”.  Inspector Clouseau would have a ball here!

We return to the dialogue of the deaf.  Having read the report, did the OAG achieve their audit objectives? To assess IT controls. To confirm if the system’s development or acquisition was backed by law. To determine the effects of the 222222 paybill change.  To determine the extent of onboarding of government services and the effect of this onboarding on revenue collection.

On the other hand, officialdom might move away from their “no money was lost” chants to explain why Treasury denied OAG document, information and system access to the system. Like payment channel and account details for the old and new gateways. Or invoices, receipts and settlement reports between 2020 and 2024. Or, critically, access to the e-citizen backend.  In aviation accident terms, OAG has tried to “investigate” e-Citizen without access to its black box!

Of course, there is merit to the point that the administrators of e-Citizen should have been allowed the right to reply before the report was published.  At the same time, we all know that these OAG reports never go anywhere, which is why they are now seeking powers of sanction.

But, again, we miss the true conversation: What’s worked/working - What’s isn’t/hasn’t - What next? With the view of government (services) as the real e-citizen platform, not this money train.

To repeat, the path to realising our promise and potential is laden with open dialogue and honest conversations. We really need to mature out of “if you are not with us, you are against us.”