Kenyans borrowed an average of Sh17 million an hour through the Hustler Fund on its first day, highlighting the appetite for cheap mobile phone loans.
The amount disbursed hit Sh408.5 million since its launch, an amount that is expected to rise in the coming days.
President William Ruto launched the fund on Wednesday in efforts to provide State-backed concessional loans to small businesses that have struggled to access financing from mainstream banks.
“Average number of transactions from the kitty wasSh500 per second on Wednesday, dropping to 190 per second on Thursday,” Cooperatives and MSMEs Cabinet Secretary Simon Chelugui said yesterday.
The kitty, which in 24 hours had registered close to 1.14 million persons, is aimed at supporting small traders who have been shunned by commercial banks.
At Sh17 million an hour, the hustler loans are yet to match the hourly lending by all commercial banks that stood at Sh72.7 million in September.
Repayment period has been capped at 14 days and borrowers will access the loans at 8 percent annually.
At 8 percent interest per annum, a borrower tapping a Sh500 loan will repay Sh501.53 after the 14 days, representing Sh1.53 in interest.
The interest is lower than the latest average bank borrowing cost of 12.38 percent and annualised M-Shwari charges of 108 percent.
There are four categories of loans under the facility which includes personal finance, microloan, Small Medium Enterprises(SMEs) and start-ups.
To be eligible as an individual, one must be at least 18 years old, have a national identity card and a registered SIM card and mobile money account with Safaricom, Airtel or Telkom.
Further, their lines must have been in use for at least 90 days. This means that if you buy a new SIM card today and register it solely for the purpose of getting the loan, you will not be eligible.
Should one fail to offset the loan within 14 days, he or she will face an increased interest rate at 9.5 per cent per annum.
Heavy defaulters would be blacklisted from the loan scheme.
The fund targets Kenyans borrowing between Sh500 and Sh50,000 as individuals. SMEs seeking capital between Sh100, 000 and Sh5 million will benefit from the fund beginning February 2023.
When a customer borrows, the approved loan is sent to their mobile money account, deposits 95 per cent of it in their money wallet, and places 5 per cent of it in their savings account.
The five per cent that goes toward the savings plan is split into 30 per cent for short-term savings and 70 per cent for long-term (pension) savings.
Kenyans can access the Hustler Fund through a USSD code and mobile app platforms offered by mobile network providers like Safaricom, Airtel, and Telkom.
