President William Ruto announced updated lending terms for the government-run credit facility Financial Inclusion Fund, also known as the Hustler Fund.
Ruto introduced a new “loan bridge” designed for ‘good borrowers’, enabling them to access higher credit limits based on their credit history. Borrowers under this “bridge” product will now receive a term loan of 30 days, up from the current 14 days on the personal loan, with a 30-day rollover at an annual interest rate of 8%, and a one-month extension with enhanced interest at 9.5%.
Speaking at the Hustler Fund’s second-anniversary celebrations at the KICC in Nairobi, Ruto explained that the enhanced loan limit is determined by a borrower’s credit score, with some borrowers receiving double or even triple their current limits.
“The beneficiaries will establish a relationship with the banks to start gaining the banking experience and credit history to inform their bankability. Limit refresh will depend on the individual’s Hustler Fund behavioural credit rating as they transact,” he said.
The Hustler Fund has been offering loans ranging from a minimum of Ksh.500 to a maximum of Ksh.50,000 at an 8% pro-rated basis or a daily rate of 0.002%. Alongside the new lending terms, a Hustler Fund credit score has been introduced, ranging from A1 for ‘Excellent’ to C3 for ‘Poor’. The score consists of nine bands: A1, A2, A3, B1, B2, B3, C1, C2, and C3, and will be used by the government to assess a borrower’s creditworthiness.
“Over two million Hustler Fund beneficiaries have demonstrated good borrowing behaviour over the last two years and their positive behaviour will earn them access to enhanced credit loans,” said Ruto, noting that the fund has already recorded over seven million repeat borrowers.
Additionally, Ruto stated that borrowers would be able to use their Hustler Fund credit score when applying for loans from banks and other lending institutions.
Launched on November 30, 2022, the Hustler Fund aims to provide credit access to Kenyans previously blacklisted by various credit rating agencies. Under the fund, 5% of every loan is allocated to savings; 70% to long-term savings and 30% to short-term savings.
As of October, the Hustler Fund had disbursed loans totalling over Ksh.57.8 billion, according to the Ministry of Cooperatives and Micro, Small, and Medium Enterprises (MSMEs) Development. However, only Ksh.45.5 billion had been repaid. Elizabeth Nkuku, the fund’s head, informed Parliament that the government is considering forceful recovery of the outstanding amounts.
