Hustler Fund, a Ksh.50 billion digital financial inclusion project to increase financial access to responsible financing for individuals and micro, small, and medium-sized companies (MSMEs) in the nation, was officially inaugurated by Kenyan President Dr. William Ruto. The draft Public Finance Management (Financial Inclusion Fund) Regulations, 2022, which enable its operationalization, created the Hustler fund.
Through innovation, development, and deployment of bottom-of-the-pyramid financial services and products, such as credit, savings, insurance, pension, and investment products, for the underserved and unserved, The Hustler Fund promotes access to responsible finance. The fund is expected to promote financial access and decrease poverty.
The Hustler Fund offers four different products: Personal Finance, Micro Loans, SME Loans, and Start Up. The Personal Finance product, which was introduced on November 30, 2022, is the Fund’s first installment.
The Personal Finance loan product will have loan limits starting at KSh. 500 and capped at KSh. 50,000.00, depending on the borrower’s credit score. The individual’s performance on consistent loan borrowing and timely payback will be taken into account when determining the increase in limit, which will also be examined and adjusted depending on the borrower’s experience with prior Hustler Fund loans. The maximum annual interest rate for the personal loan is 8%, calculated on a prorated basis.
The loan will be disbursed immediately after approval via the customer’s Mobile Money account to their phone. The customer’s Mobile Money wallet will get 95% of the whole approved loan amount upon payout, and the remaining 5% will be transferred into the customer’s savings account plan with the money. The savings plan will divide savings into 30% short-term savings and 70% long-term savings, meaning that 70% of the 5% will go toward long-term savings (pension) and 30% toward short-term savings.
The loan must be repaid within 14 days at an annual interest rate of 8%. For instance, a consumer who borrows Kshs 1,000 will receive Kshs 950 in return. The customer will be required to repay the loan in 14 days; given that the whole payback is completed within that time frame, the borrower may repay the loan in full or in part. The customer’s credit score suffers if the loan is not repaid within the allotted 14 days. However, once the loan is fully repaid, the loan agreement is finished, and the client can apply for another loan. Customer alerts of all transactions will be sent through SMS.
President Ruto stated, “Today we are on a journey to a single digit interest rate in the Republic of Kenya,” during the Fund’s opening at GreenPark in Nairobi. This is a historic moment because we now have a product that only requires a citizen, his or her phone, and a track record, and allows them to borrow as much as they need as long as they adhere to their track record. This product does not require an application, a guarantee, or a committee’s approval. The collateral system that has historically been based on title deeds, log books, and securities is being replaced today. We are beginning the process of creating a collateral system today that is based on credit scoring, allowing every citizen to improve their credit scores and gain access to credit as long as they do so.
The Hustler Fund can be accessible via the mobile APP platforms of any Kenyan Mobile Network Operator (MNO) or by dialing the short code *254# on the Safaricom, Airtel, and Telkom networks. Fewer than 24 hours after the Hustlers Fund’s establishment, Kenyans borrowed at least Ksh. 408.5 million from it, according to official data, underscoring the demand for reasonable mobile phone loans in the nation.
