Ruto’s flagship project, Hustler Fund in limbo as defaults hit KSh3 billion
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Hustler Fund defaults hit Sh3 billion in nine months since President William Ruto launched the project in November 2022
Hustler Fund defaults hit Sh3 billion in nine months since President William Ruto launched the project in November 2022.
Hustler Fund borrowers are defaulting on payments at a higher rate than borrowers at commercial banks, saccos, and microfinance banks.
29 percent of the Hustler Fund’s outstanding loans, totaling Sh10.2 billion, have been deemed to be portfolio-at-risk, meaning they have not been paid back by the borrowers according to the prearranged timeline.
As a result, Hustler Fund loans totaling around Sh2.9 billion in borrowed funds are classified as non-performing loans.
The fund started operations at the end of November 2022, advancing personal loans as low as Sh500.
“Out of the Sh33 billion that has been lent out [under the Hustler Fund], the outstanding loan book is about Sh10.2 billion; remember these are short-term loans so they get repaid pretty fast. Out of the outstanding amount, 29 percent is not performing on time,” the President’s adviser on matters of financial inclusion, Moses Banda said.
“So, about Sh7.9 billion of the outstanding amount is performing on time. Just like any other lending, there will always be challenges of non-performing loans.”
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He added that the quality of the Hustler Fund loan book has witnessed a general improvement since the introduction of credit scoring for all borrowers at the end of February.
The government has also taken steps to link current affirmative action grants to the Hustler Fund in an effort to increase recovery. This means that persons who default on one are prevented from accessing another until their credit scores are repaired.
According to the government, the Hustler Fund’s credit score is examined once every four months to make sure that risk is handled prudently.
The Hustler Fund is so far reported to have disbursed Sh33.3 billion worth of loans to 17.2 million borrowers, of which 7.6 million are repeat borrowers, translating to an average loan size of Sh1,936.
The fund has mobilised about Sh1.8 billion in savings, 30 percent of which are accessible after one year while the remaining 70 percent is ring-fenced towards borrowers’ pensions.
Similar to other mobile loaning products, however, the spectre of defaults looms large, despite the repeated reminders by the government that such defaults would have implications when one is looking to access other State services.
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