ICT and Digital Economy Cabinet Secretary Elius Owalo now says Hustler Fund loans have turned Kenyans into entrepreneurs.
Owalo said many Kenyans no longer need to look for jobs.
"Overally, Hustler Fund is turning Kenyans who had nothing to do into entrepreneurs or employers as opposed to job seekers," Owalo said when he appeared on KBC television on Wednesday, December 22.
Hustler Fund disbursement
The government has so far loaned Kenyans a total of Ksh9.58 billion through the Hustler Fund since its launch end of last month, pinpointing the massive appetite for relatively cheaper loans amongst cash-strapped households.
At Ksh9.58 billion, it means Kenyans borrowed an average of Ksh504 million daily for the 19 days the scheme has been operational.
The amount is expected to bulge further upon the inclusion of businesses and co-operatives in the second phase of the scheme’s rollout next year.
The repayment rate of the fund, however, remains quite low, with only Ksh2.64 billion having been recovered, meaning the government will still be chasing some Sh6.94 billion in the next repayment phase.
“Day 15 and 16 recorded repayments of 52.45 and 47.77 per cent respectively which also demonstrates an impressive positive trend by the hustlers to repay the borrowed amounts and apply for more funds,” said Simon Chelugui, cabinet secretary for cooperative and Micro, Small and Medium Enterprises (MSME) development.
Nairobi tops the list of borrowers with Ksh1.15 billion transaction value, followed by Kiambu and Nakuru counties at Ksh651.1 million and Ksh454.3 million worth of loans, respectively.
Other leading borrowers include Machakos, Kakamega, Kilifi and Usain Gishu counties.
Lamu, Isiolo, Mandera, Wajir, and Marsabit are some of the counties with the least transaction value.
Hustler Fund for hustler businesses
According to Kenya Kwanza manifesto, the funds are meant to promote hustler businesses by uplifting them from the bottom going upwards. The personal finance product or individual loan was the first to be rolled out and entitles loanees to a minimum of Sh500 and a maximum of Sh50,000 at an 8 per cent interest rate per year, which is the lowest in the market.
The government is now working on a regulation to guide the entry of the second product of the facility, which will be unveiled in February 2023, expanding it to Sacco’s, microfinance institutions, and Banks.
The loan range will be capped at 2.5 million, targeting over three million enterprises under this category. However, how the government is going to get funds to sustain the kitty is still a concern for many, considering the low number of repeat customers and repayment pattern that would have otherwise given it more liquidity. Some analysts suggest that the administration could include the “Hustler Fund” in the supplementary budget that is expected to be drafted and ratified by parliament in January next year.
But sources from the National Treasury reveal that money is likely to be drawn from either the Consolidated Fund or any of the government reserves on a temporary basis as the fund grows to self-sustain itself. Customers are required to repay the loans within 14 days at an interest rate of 8 per cent per year or 0.02 per cent daily, which jumps to 9.5 per cent per annum for the days on which the facility goes into default.
