Hustler Fund budget Sh10bn ahead of private sector entry


President William Ruto and Prime Cabinet Secretary Musalia Mudavadi during the launch of the Hustler Fund at Green Park Terminus, Nairobi. FILE PHOTO | NMG

The budget for the Hustler Fund has been capped at a fifth of the funds initially planned for the year starting July, a pointer that the financial inclusion fund will need heavy private sector participation in the near term.

The State Department of Micro, Small and Medium Enterprise (MSMEs) Development has disclosed an allocation of Sh10 billion against the Sh50 billion requirement for the period, which will mark President William Ruto’s first full-year expenditure plan.

The projected funding is lower than Sh20 billion for the current year, which the National Assembly will approve through a supplementary budget.

The reduced budgetary ceiling, which will be debated by lawmakers in coming months, is in line with the promise Treasury secretary Njuguna Ndung’u gave the IMF late last year that the Fund “is envisaged to have heavy private sector participation with limited budgetary implications.”

Read: Hustler Fund loans hit Sh16bn in two months

The financial inclusion fund forms a key plank of Dr Ruto’s new economic order that seeks to address unemployment and the lack of opportunities for low-income earners through affordable credit.

Through the fund, whose first phase was launched last November 30, the President has pledged to pump billions of shillings in credit to support small traders such as mama mbogas (grocery retailers) and the boda bodas (two-wheel taxi operators).

More than 18 million loans worth Sh17 billion have since been issued through the facility that currently runs on M-Pesa, with 14.2 million repeat loans, Dr Ruto said last Friday.

Some 800,000 borrowers have, however, defaulted by failing to pay within 14 days limit for loans ranging from Sh500 and Sh50,000 at an annual interest rate of eight percent.

The State plans to launch the second phase of the fund in March by increasing the loan limit to Sh2.5 million, rivalling commercial banks, which have over the years perceived small traders as risky borrowers.

The second phase will see savings and credit cooperative societies start to access ‘Hustler’ loans.

The MSMEs Development department, in the budgetary proposal report for the 2023/24 financial year, says it will target 1,250 saccos and 75,000 chamas (investment groups).

Read: How the Hustler Fund will be run 

Besides credit, the fund also has a built-in savings component targeting Kenyans outside formal employment, supported by partial contributions from the State where taxpayers will match Sh1 for every Sh2 contributed, capped at Sh3,000 annually.

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