Kenyans default on Hustler Fund loans with only 5pc repaying
Kenyans default on Hustler Fund loans with only 5pc repaying since the inception of the financial kitty
Kenyans default on Hustler Fund loans with only 5pc repaying since the inception of the financial kitty.
Only 5.1% of the loans taken out by Kenyans from the Hustler Fund have been paid back, putting the Hustler Fund’s capacity to continue operating as planned in jeopardy.
The National Treasury is betting on adequate repayment of the loans to supplement the resources that will be allocated to the Fund each year by Parliament.
Of the Sh3.69 billion so far given, the Ministry of Co-operatives and Micro, Small, and Medium Enterprises reported that borrowers have repaid Sh190.62 million.
The fund, which has handled 6.46 million transactions, has been chosen by 10.62 million Kenyans.
The fund is administered by KCB Bank and Family Bank.
On behalf of borrowers, Sh184.48 million has been saved, and 185,028 people have already taken out multiple loans.
The high borrowing rates signal a huge appetite for loans among Kenyans, who are heaving under a high cost of living that is forcing them to resort to short-term loans to meet their daily needs.
The loans must be repaid by the customers within 14 days at an interest rate of 8% annually, or 0.028% daily.
However, the low return rate raises the possibility that the government may have trouble recouping the initial investment.
Govt processes 22 Hustler Fund loans per second with Ksh 2.9 bn already disbursed
President William Ruto had warned that the loans are not free money and that the government will seriously pursue defaulters.
Some 95 percent of a loan is deposited in a borrower’s money wallet while 5 percent is deducted automatically to go to the borrower’s savings.
Of the money that goes to savings, 70 percent will be put in long-term savings in a pension account, while 30 percent will be short-term savings.
The two banks will withhold the savings that a borrower has in the fund until they repay their loans.
To be eligible, a borrower must be at least 18 years old, have a national identity card, and a registered SIM card and mobile money account with Safaricom, Airtel or Telkom. The line must have been in use for at least 90 days.
It is barely a week after President Ruto launched the much-awaited fund, which was part of his key campaign promises.
Ruto launched the personal finance product, which is among the four loan products to be provided by the Hustler Fund. The others – a microloan, one for small and medium-sized enterprises (SMEs), and another for start-ups – will be launched at a later date.
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