Inside state’s Sh100bn drive to turn hustles into real businesses

In the face of stubborn unemployment and a swelling youth population, the government is increasingly betting on empowering citizens to create jobs instead of waiting for them to come by.

From the Hustler Fund to the newly rolled out Nyota Project, billions of shillings are now being pumped into small enterprises and youth-led businesses in what officials say could be one of the country’s most significant economic inclusion experiments.

According to Micro, Small and Medium Enterprises Development Principal Secretary, Susan Mang'eni, lessons on how previous funds were managed is playing a key role on how the new funds will be managed.

She said that the scale and reach of these empowerment funds are already reshaping Kenya’s business landscape, offering millions of Kenyans access to credit and training that had long remained out of reach.

“Next month we will begin and impact assessment study and training on how, the funds have been used and see the impact they are creating before we begin the second phase of National Youths Opportunities Towards Advancement funds disbursements,” the PS told the trade Committee on Thursday.

The government’s flagship financial inclusion programme, the Hustler Fund, has disbursed Sh84 billion to more than 27 million Kenyans since its launch three years ago.

The fund, designed to offer small loans through mobile phones without collateral, has become one of the largest digital credit platforms targeting micro-entrepreneurs at the bottom of the economic pyramid.

Data presented by the State Department for MSMEs shows that Sh71.8 billion has been disbursed through personal loan products to more than 27 million beneficiaries across the country.

An additional Sh196.7 million has gone to over 22,900 groups spread across all 47 counties, while Sh12.2 billion has been issued to about 800,000 borrowers who have graduated from personal loans to a bridge loan product offering credit limits of up to Sh150,000.

According to experts, similar projects have worked around the world and training will play a key role in their success.

Meru University deputy vice chancellor for administration, finance, and planning, Professor Hilda Omae, says that upskilling and training is key for survival of many businesses.

"Most businesses fail because young entrepreneurs lack knowledge, market research, and mentors to guide them," said Omae.

For policymakers, this is not merely a credit scheme but an attempt to build a new financial ecosystem that integrates informal entrepreneurs into the formal economy.

With a biting unemployment in the country, Mang’eni says that more than 5,000 new borrowers continue to join the platform daily, creating a growing pool of entrepreneurs who are gradually building credit histories that could unlock larger financing from banks and other financial institutions.

According to the PS Kenya Industrial Estates (KIE), another government-backed financing agency targeting manufacturing enterprises, has disbursed Sh950.4 million in credit to 404 enterprises in the current financial year alone.

Much of the funding is directed toward sectors seen as key to job creation and industrial growth.

Agro-processing enterprises have received Sh270.3 million, while building and construction materials businesses have accessed Sh199.1 million. Other sectors supported include leather products, textiles and apparel.

Government officials say the focus on manufacturing value chains reflects a broader strategy to stimulate domestic production and reduce reliance on imports.

Meanwhile, grassroots enterprise programmes are also gaining momentum. The Uwezo Fund has disbursed Sh385 million to community initiatives while providing training to 3,901 groups comprising over 58,500 beneficiaries.

The programme equips entrepreneurs with business skills ranging from bookkeeping to navigating government procurement opportunities under the Access to Government Procurement Opportunities (AGPO) framework

“Another 500 groups have received specialised training on market access and supply chain linkages, an effort aimed at ensuring that businesses receiving funding can find sustainable markets for their products,” she told the committee.

Each year, hundreds of thousands of young people enter the labour market, yet the formal sector creates only a fraction of the jobs required to absorb them.

The State department argues that small businesses offer the most realistic path to bridging this gap.

Globally, small and medium-sized enterprises dominate economic activity. SMEs account for roughly 90 percent of businesses worldwide and more than half of global employment.

The pattern is consistent across both developed and emerging economies.

In Japan, SMEs make up around 99 per cent of businesses and contribute about 70 per cent of employment while generating roughly half of the country’s GDP.

Within the European Union, SMEs represent 99 per cent of all businesses and are widely considered the backbone of economic growth and innovation.

Australia’s SMEs employ about 4.7 million people and contribute roughly one-third of the country’s GDP, while in India the MSME sector accounts for nearly 80 per cent of businesses, playing a central role in manufacturing, agriculture and ICT services.

China has gone even further by nurturing what it calls “little giant” companies — small but highly specialised firms operating in advanced sectors such as technology, manufacturing and renewable energy.

One of the most ambitious initiatives in this effort is the National Youth Opportunities Towards Advancement Project, commonly known as the Nyota Project.

The programme targets vulnerable youth across all 1,450 wards in Kenya’s 290 constituencies and aims to equip them with business skills and start-up capital.

So far, the project has reached 121,800 young people through its business support component. Each beneficiary has received the first instalment of Sh25,000 in start-up capital, with Sh3,000 of the amount set aside as savings.

As of March 12, 2026, the Nyota fund had disbursed Sh3.05 billion in its first phase.

The state department is now pushing for an expanded allocation in the next national budget, seeking to increase the fund’s resources to Sh11 billion for the second phase of the programme.

The project has also generated a significant number of indirect jobs. Forty-four firms have been contracted to provide business development training, employing 3,633 graduate-level trainers — more than half of them women — as well as 5,500 mentors supporting youth entrepreneurs across the country.

Participants are currently undergoing mentorship and advanced business training ahead of the second instalment of funding expected later in the year.

Government planners hope to complete the current phase before the end of the financial year and launch a new intake in July 2026, a move that will require an estimated Sh11 billion in additional funding.