How proposed Ksh50 billion Hustler’s fund will operate

The government has revealed a framework which will be used to disburse the Sh50 billion hustler fund.

President William Ruto said he will launch his flagship Hustler Fund credit and savings product on December 1, 2022, where credit products will be available to small businesses on digital platforms.

Under the plan, those seeking to benefit through the Sh50 billion kitty ought to have joined cooperative groups, which will act as their guarantors.

“The Hustlers Fund will provide credit products to small businesses on digital platforms at affordable rates, to individuals and through chamas, groups, saccos and co-operatives,” Ruto said in his Mashujaa Day address yesterday.

The President said all borrowers on this platform will also participate in a short-term savings plan and long-term pensions program.

“Every saving made by borrowers on this platform will be matched by the government of Kenya on a 2:1 ratio to a level to be determined by the programme,” he said.

President Ruto said access to credit is a stimulant that invigorates the economy and their commitment to affordable credit was at the heart of the Kenya Kwanza election campaigns. He said that even before the fund is set up, the government has made several interventions to make credit accessible.

“Safaricom and their financial partners have brought down the cost of Fuliza by reducing interest rates by 50 per cent. As part of that agreement, four million borrowers, who had been blacklisted, will be freed from the yoke of the Credit Reference Bureau, in the coming days,” he said.

The head of State reiterated that they have also secured an agreement with CRB that it will abandon the punitive penalty of blacklisting borrowers and move to a credit scoring system that makes borrowers eligible for credit even as they work to improve their creditworthiness. Savings plan

“As a result, no citizen will be excluded from the credit system. They will, therefore, be eligible to access credit as they work their way out in paying their loans,” the president said.

Already players in the lending space are working on modalities to delist a majority of Kenyans.

Safaricom CEO Peter Ndegwa on Tuesday said the company is currently liaising with KCB Bank together with NCBA to facilitate the move, which aims at increasing revenue collection by enlarging the customer margin.

“We will be taking them off the listing in the CRB so that they are able to access new loans; it will be four million additional new customers who will be free to access Fuliza and other lending products out there…the repair will happen from November,” he said.

Last month, President Ruto met Safaricom chief executive Peter Ndegwa, KCB’s Paul Russo and NCBA’s John Gachora moments before they announced revised Fuliza overdraft charges.

The head of State affirmed at a joint press briefing after the meeting his administration’s plan to lower the cost of credit.

“I am happy that you are already walking on the right trajectory. The announcements you have made here are very positive and in the right direction. I am very confident that by walking this journey in the direction you have started, we will get to the correct destination,” he said.

The telco and its bank partners have revised charges on the popular overdraft facility that was launched in January 2019 to facilitate seamless transactions when one runs out of money.

Daily charges on loans of up to Sh1,000 will now come down from Sh10 to Sh5 but the company has retained the 1 per cent access fee on all borrowings.