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President Ruto launches Hustler Fund to connect Kenyans with access to affordable credit

Kenya’s President Dr. William Ruto officially launched Ksh.50 billion Hustler Fund, a digital financial inclusion initiative designed to improve financial access to responsible finance for personal, micro, small, and medium-sized enterprises (MSMEs) in the country. The Hustler fund is a creation of the draft Public Finance Management (Financial Inclusion Fund) Regulations, 2022, thereby allowing its operationalization.

The Hustler Fund provides access to responsible finance by innovating, developing, and deploying bottom-of-the-pyramid financial services and products that are affordable, accessible, and appropriate for the unserved and underserved persons, including credit, saving, insurance, pension, and investment products. It is envisaged that the fund will help to improve financial access and reduce poverty

The four products available under the Hustler Fund are: Personal Finance, Micro Loans, SME Loans and Start Up. The first installment of this Fund is the Personal Finance product which was launched on November 30, 2022.

The loan limits for the Personal Finance loan product will be a minimum of KSh. 500 up to a maximum that will be determined by the borrower’s credit score and capped at KSh. 50,000.00. The increase in limit will be dependent on the individual’s performance on consistent loan borrowing and repayment on time and shall be reviewed and adjusted based on the borrowing and repayment history of previous Hustler Fund loans taken. The loan interest rate on the personal loan is capped at 8% per annum computed on a pro-rated basis.

Upon approval, the loan will be disbursed directly to the customer’s phone via their Mobile Money account. Out of the total approved loan amount, on disbursement 95% shall be deposited to the customer’s Mobile Money wallet, and the remaining 5% shall be deposited to the customer’s savings account scheme of the fund. The savings scheme will split savings into 70% long-term and 30% short term savings i.e., 70% of the 5% will go into long term (Pension) and 30% of the 5% will go into short term.

The loan repayment period shall be 14 days with an interest of 8% per annum. For example, if a customer borrows Kshs 1,000, he/she will receive Kshs. 950. In 14 days, the customer will be expected to pay back – the borrower may re-pay the loan as a lump sum or in part provided that the full repayment is done within 14 days. If the loan is not repaid within the stipulated 14 days, the customer’s credit rating is negatively affected. However, if the loan is paid in full, the loan contract is closed, and the customer can request another loan. All transaction notifications to the customer will be by SMS.

Speaking during the launch of the Fund at GreenPark in Nairobi, President Ruto said, ”Today we’re walking a journey to a single digit interest rate in the Republic of Kenya. This is a momentous occasion, that today we have a product that does not need application, that does not need guarantee, that does not need an approval by a committee, it just needs a citizen, his/her phone and a track record and can borrow as much as they want, so long as they keep to a track record. Today, we are replacing the collateral system that has always been built around Title Deeds, Log Books and securities. Today we’re starting the journey to build a collateral system built on credit scoring, that every citizen can grow their credit scores and access credit as long as they work on their credit ratings.”

The Hustler Fund can either be accessed using the short code *254# on Safaricom, Airtel and Telkom networks or through mobile APP platforms of any of the Mobile Network Operators (MNOs) in Kenya. Official data showed that Kenyans borrowed at least Ksh.408.5 million from the Hustlers Fund barely 24 hours after its launch, further highlighting the need for affordable mobile phone loans in the country.

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