Women and small businesses can now borrow money from the state-backed Hustler Fund to grow their enterprises as the State extends it beyond personal finance.
President William Ruto on Thursday announced the new changes to the Financial Inclusion Fund as he moved to actualise his campaign promise of helping individuals and businesses at the bottom who have traditionally been locked out of the credit market by commercial banks.
The head of State unveiled a remodelled Hustler Fund that has Women Enterprise Fund (WEF) and the microloan product, even as the loans disbursed grew to Sh21.1 billion.
This essentially ends efforts to consolidate the Youth Fund, the Women Fund, Uwezo Fund into Biashara Fund.
Dr Ruto hailed the new WEF as being efficient as it reduces the current loan processing time from 45 days to instant access.
“We have eliminated financial intermediaries to ensure dignity in borrowing and cut down on the cost of accessing credit,” said the head of state.
The women’s enterprise fund had 97,331 groups, with Ruto noting that 59,200 of them were ready to be on-boarded to the digital platform.
“The 38,131 groups that are repaying their loans must also be onboarded on the digital platform,” said Ruto, adding that Sh500 million had already been set aside for this new fund.
The President also unveiled a micro-loan product that targets 2 million Kenyans plying their trade in the informal sector that had been locked out of credit for lack of collateral.
The product targets both individuals and groups doing business in the informal sector, with the Government first launching the individual micro-enterprise loan product for lending between Sh10,000 and Sh200,000.
These loans will be charged an interest rate of seven percent which will be calculated on a pro-rata or daily basis.
Ruto, who had promised a Sh50 billion Hustler Fund during his campaigns, said the individual micro-enterprise loan product has flexible repayment schedules of one, three, six or nine months, all the way to a maximum of one year.
The government has since published regulations that reveal how the Hustler Fund will be run.
The regulations, to be known as Public Finance Management (Financial Inclusion Fund) Regulations, 2022 establish an eight-member Advisory Board including, a non-executive chairperson appointed by the President, the Principle Secretaries for National Treasury, State Department for Micro, Small, And Medium Enterprise (MSME) Development and State Department for Co-operatives.
Part of the loans taken by individuals on the Hustler Fund is saved, with the Ruto noting that by 9 am on Thursday borrowers had saved Sh1,055,743,826 on the personal loan product.
And while in the first phase, five per cent of the borrowing was going into savings, a voluntary savings option was now added with borrowers able to earn interest of between five and seven percent.