Why would you drop cooperatives/saccos?
Retail banking targeting smes have failed - equity bank and others receive billions from some donors for onward lending - but they still charge 20% interest rate.
Banks have failed.
Saccos are engine of our economy...
Hustlers are not comfortable working to banking halls...but are at home in saccos.
Sacco ministry will ensure the sacco build capacity - and improve governances.
Sacco can put in collatoral - individuals cannot.
It also become difficult to manage individuals.
Unless we go fintech - and then we get into re-collection problems.
So saccos de-risk the gov losing it's money - as it attempt to de-risk the lower end borrower.
Individuals and business - have banks, fintech, etc.
Mama mbogas and boda bodas is where real work is required.
I imagine Ruto next job will be to go round the country - creating cooperatives - saccos - of all sorts.
After six months - they should be ready to receive hustler fund.
Hustler fund should be exclusively for SMES - lending individuals say max of 200k - otherwise few fatcats will take all the money.
These should target boda, mama mboga, farmers etc
Hustle fund will be lending to banks that extends the loans to saccos, saccos formed for the sole purpose of borrowing from the fund. There's no derisking its only that now the fund will absolve the risk that fintechs now undertake. The question is why are fintech loans so expensive? I'd think its cause of the opacity of borrowers financial status and obviously lack of collateral.
Details are scanty, I hope atleast they drop the sacco aspect, lend to individuals or entities who are already in business