President William Ruto yesterday launched the second phase of the Hustler Fund, which will give loans of between Sh10,000 and Sh200,000 to businesses following the relative success of the individual loan product that was launched three months ago.
Dr Ruto on November 30 last year launched the first phase of the Hustler Fund which has been issuing 14-day loans of between Sh500 and Sh50,000 at an interest rate of eight per cent per annum or 0.02 per cent daily.
Some 19.06 million customers have borrowed Sh21.1 billion from the fund in 33.36 million transactions and have repaid Sh11.8 billion, translating to a repayment rate of 56 per cent.
The Head of State yesterday launched the micro-loan product that seeks to help millions of small businesses, which are the bedrock of the country's economy, access affordable credit to boost their operations.
The product will lend to individual business owners as well as business groups at an annual interest rate of seven per cent on a pro-rata basis. The loan has flexible repayment schedules of one, three, six or nine months to a maximum period of one year.
The third loan product that will be launched at a later date is the small and medium-sized enterprises (SME) loans while the fourth product will be start-up loans.
“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.
The President said the new loan product will reach at least two million Kenyans involved in micro-enterprises and will help the businesses to build a good credit score that will gradually raise their loan 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 per cent on their savings.
Further, Dr Ruto revealed that the government is developing a Sharia-compliant loan product that “should be completed soon” and will cater to the needs of Muslim borrowers.
“I encourage business owners to formally register their enterprises,” said the President.
At the same time, the government has linked the Women Enterprise Fund (WEF) to the Hustler Fund platform to enable women to borrow loans from WEF through their phones.
This, he said, has eliminated brokers in the disbursement of WEF loans, which is set to cut the cost of accessing credit.
