More than 65 per cent of Kenyan adults have signed up for the State-backed Hustler Fund, revealing the growing appetite for cheaper digital loans.
Data from the Ministry of Cooperative and Micro, Small and Medium Enterprises shows that 16,591,441 adults had registered by Monday, representing 65 per cent of the 25.36 million Kenyans who are aged 18 and above.
The high number points to the tough times facing adults who are jobless and have faced hurdles in getting credit from other platforms including digital lenders.
“The Fund is a policy intervention to save those at the bottom of the economic ladder through affordable credit and thus liberate them from predatory lenders,” Simon Chelugui, the Cooperatives Cabinet Secretary said on Monday.
The data shows that Kenyans have tapped Sh9.58 billion from the kitty since President William Ruto launched it last month.
Some Sh2.643 billion has been repaid and Sh479 million saved under the kitty that the new administration sees as key to the financial inclusion of Kenyans in the low-income band and those who are jobless.
The economy has over the years struggled to create enough jobs for college and university graduates, leaving millions of Kenyan adults unable to raise cash for the daily bills.
The jobless Kenyans turned to digital lenders but high-interest rates have forced them to default, leading to many being black-listed on Credit Reference Bureaus and thus locked from accessing credit.
The fund is seen as a key policy intervention to save those unable to access credit besides offering them an opportunity to save for old age.
The data shows that some 2.69 million Kenyans have borrowed more than once, highlighting the growing popularity of the loans.
The government targets to ease credit access to between 10 and 15 million Kenyans through the Fund.
Loans from the Hustler Fund have an interest rate of eight per cent interest per annum with a borrower who taps an Sh500 loan repaying Sh501.53 after 14 days, representing Sh1.53 in interest.
The interest is lower than the latest average bank borrowing cost of 12.38 per cent and annualised M-Shwari charges of 108 per cent.
There are four categories of loans under the facility which include personal finance, microloan, Small and Medium Enterprises and start-ups.
One must be at least 18 years old and have a national identity card and a registered SIM card and mobile money account with Safaricom, Airtel or Telkom to qualify for the loans.
Further, their lines must have been in use for at least 90 days.
The Treasury will allocate Sh250 billion up to 2017 or Sh50 billion every financial year for the kitty. Mr Chelugui added that a number of undisclosed foreign and local investors have declared interest to support the kitty through loans and grants.
