Micro-Businesses to Gain in Hustler Fund Phase 2

After the relative success of the individual loan product that was introduced three months ago, President William Ruto yesterday launched the second phase of the Hustler Fund, which will provide loans of between Sh10,000 and Sh200,000 to enterprises.

On November 30 last year, Dr. Ruto officially launched the Hustler Fund’s initial phase, which has since been issuing 14-day loans of between Sh500 and Sh50,000 at an interest rate of 8% annually, or 0.02% daily.

A payback percentage of 56 percent was achieved by the 19.06 million clients who borrowed Sh21.1 billion from the fund in 33.36 million transactions and paid back Sh11.8 billion.

Yesterday, the Head of State launched a microloan program that aims to give millions of the nation’s small businesses—the backbone of its economy—access to finance at competitive rates to expand their operations.

The pro-rata annual interest rate on the product will be seven percent for loans to both individual business owners and business groupings. Flexible repayment plans of one, three, six, or nine months with a maximum of one year are available for the loan.

Customers can access these loans by dialing *254# and registering their businesses.

Small and medium-sized companies (SME) loans will be the third loan product to be introduced later, and start-up loans would be the fourth.

The Hustler Fund’s two implementing banks are KCB and Family Bank.

“We have kept the promise and, today, we launch the second product, the micro-loan product; as a financial intervention to the informal business sector that has been excluded from accessing credit for far too long,” said Dr. Ruto.

According to the President, the new loan product will assist at least two million Kenyans who own micro businesses to create a strong credit history, which will gradually increase their lending limits.

The Head of State has also added a voluntary savings option on the Hustler Fund that will enable borrowers to earn annual interests of between five and seven percent on their savings.

“I encourage business owners to formally register their enterprises,” said the President.

In order to allow women to obtain loans from WEF via mobile phones, the government has simultaneously connected the Hustler Fund portal to the Women Enterprise Fund (WEF).

He claimed that by doing this, brokers were no longer involved in the distribution of WEF loans, which will lower the cost of obtaining credit.