Ruto to utilize Safaricom’s Fuliza to disburse Hustler Fund
Ruto to utilize Safaricom’s Fuliza to disburse Hustler Fund in a new partnership deal with Safaricom.
President William Ruto is seeking to reach an agreement with Safaricom and other lending organizations in order to offer lower-interest loans to small business owners.
The State will rely on Safaricom’s lending infrastructure, which has enabled its credit products Fuliza and M-Shwari, as part of the proposed agreement to provide loans to small and micro companies under the so-called “hustler fund.”
It shows a change in policy from prior governments that used commercial banks to distribute state-owned affirmative action funds like the Uwezo Fund.
According to the agreement, Safaricom will receive commissions for managing the “hustler” loans along with local banking partners.
Small enterprises who have had trouble obtaining funding from traditional banks will be able to take advantage of State-backed concessional loans through the “hustler fund.”
President William Ruto had in his campaigns promised a new economic order that would address unemployment and lack of opportunities for low-income earners through affordable credit.
He has pledged to pump in billions of shillings to support small traders such as mama mboga [grocery retailers] and the boda bodas [two-wheel taxi operators].
The establishment of a ‘hustler fund’, which he previously said will initially have Sh50 billion, is geared towards providing cheap and easy loans for low-income earners without collateral under his bottom-up economic model.
“The government of Kenya, and I have the nominee for Treasury and the nominee ICT here, …will be working with you in the fintech space because we want to work on a credit [facility], especially for micro, small and medium enterprises,” Ruto told the chief executives of Safaricom, KCB, and NCBA in Nairobi Wednesday.
“In the short-term, the assignment my good friend Eliud Owalo (Cabinet Secretary nominee for ICT) and Prof Njuguna Ndungú [Cabinet Secretary nominee for National Treasury] will have is to structure with yourselves [Safaricom and its partners] the hustler fund.”
Over 30 million active users in Kenya can choose from a variety of payment services, loans, and savings options through M-Pesa.
Kenyan banks KCB Group and CBA Group, which previously had agreements with Safaricom to provide quick loans on the M-Pesa platform under the M-Shwari product, underwrite Fuliza.
Due to a decline in revenue from traditional voice and text services, the dominant telecom operator has turned to the mobile money service as its main source of profit development.
The State is attempting to use the M-Pesa network to provide microloans with interest rates that are limited to one digit.
Currently, annualized interest rates charged to borrowers by mobile phone-based microlenders exceed 100%.
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