The Treasury has allocated an additional Sh10 billion to the Hustler Fund as it targets expanding its offering beyond personal unsecured loans to insurance in the near future.
The allocation for the year starting July is half the current Sh20 billion budget for the financial inclusion fund, which offers low-value unsecured loans, at an annualised interest of eight percent repayable in two weeks.
Treasury Cabinet Secretary Njuguna Ndungâu said Sh11 billion has been invested in the revolving fund out of the total budget since it was rolled out last November for individual borrowers before being opened up for groups such as informal investment groups (chamas) and saccos in June.
Some 16.07 million Kenyans, including 7.1 million borrowers, have accessed Sh30.8 billion from the fund, Prof Ndungâu said, with one customer accessing loans 50 times.
âThis programme aims to lift those at the bottom of the pyramid through structured products in personal finance that include savings, credit, insurance and investment,â the Treasury chief said.
The financial inclusion fund forms a key plank of Dr Rutoâs new economic agenda that seeks to address unemployment and the lack of opportunities for low-income earners through affordable credit.
The Hustler Fund runs alongside similar affirmative action funds which have over the years chalked up massive bad debt, creating a liquidity crisis and threatening their sustainability.
The Ruto administration has further allocated Sh192 million to Uwezo Fund, Sh182.8 million to Women Enterprise Fund and Sh175 million to the Youth Enterprise Development Fund.
Besides credit, the Hustler Fund also has a built-in savings component primarily targeting those outside formal employment, supported by partial contributions from the government where taxpayers will match Sh1 for every Sh2 contributed with a cap of Sh3,000 annually.
Prof Ndungâu said Sh1.5 billion has been saved as mandatory savings, while another Sh17 million has been saved on a voluntary basis.
The government contribution to the Hustler pension scheme is projected at Sh2.5 billion next financial year.
Top banks like Equity and Absa Kenya have registered interest in creditworthy borrowers who will graduate from Hustler Fund.
âThe Hustler Fund has won our hearts because of its design around financial discipline. It is not free money. It is going to be repaid. It is a loan that you have to have credentials in terms of credit rating [to access], it forces you to have saving culture⊠and it reaches the masses,â Equity Group chief executive James Mwangi said last November.
âThe risk is being taken by the government. We will support it by scaling. People will graduate from Hustlers fund to private sector Hustler fund.â
