• This is the largest ever amount of money that any government has ever appropriated towards financial autonomy and access to credit for any group of people.
• The President articulated five key principles of the Hustler fund that make the facility different from other credit platforms.
On Wednesday, President William Ruto delivered a key campaign pledge by launching the Hustle rFund, a Sh50 billion worth credit facility for Kenyans.
This is the largest ever amount of money that any government has ever appropriated towards financial autonomy and access to credit for any group of people.
The President delivered a very passionate speech, possibly one of his best, without reading it. One could tell that this fund was indeed so dear to his heart, and he meant every word that he pronounced himself upon.
A game-changer in matters access to credit, the fund will help circumvent two major bottlenecks. First is the fact that in recent times, the government has been borrowing in excess of over Sh900 billion from the domestic lenders, thus crowding out investors who are largely small to medium sized companies owned by the common mwananchi.
Secondly, while only 15 years ago banks were hawking loans literary, today it’s very difficult for the banks to lend little amounts of money without so much documentation and assessment.
Further, the interest rates had at one point skyrocketed to nearly 30 per cent as well. The Hustler fund, therefore, is indeed a concerted effort in ensuring that majority of Kenyans at the bottom of the pyramid access credit for their own ventures.
It’s interesting to note that 80 per cent of fin-tech borrowing is between Sh100 and Sh2,000. This means the majority of Kenyans need this money for daily transaction.
This alone increases circulation in a very big way, and indeed helps push other monies within the economy in a very fundamental way. Simple logic dictates that if one is able to get Sh100 to say increase capital or move his or her goods to the market, then this leads him to generate and therefore earn an income for the day to feed his children.
It also means a vendor is able to use local market intelligence to his advantage in a timely and reliable manner without experiencing the bottlenecks that arise from the long wait occasioned by credit processing procedures.
The President articulated five key principles of the Hustler fund that make the facility different from other credit platforms. To begin with, it’s the fund with the lowest interest rate at 0.0002 per cent per day from a high of 10 per cent by the shylocks.
In fact, this is as good as interest free. It means that it will help to do away with middlemen who have been bridging the lending gap between investors, and the banks since the latter prefer to lend to govt.
Secondly, the fund is the single-most largest cheapest credit facility in Kenya today. This means that Kenya has started on a journey towards single digit interest rates. Something that will help unlocks huge potential by transferring profit to the investor in order to make business ventures worthwhile.
Currently, banks and telcos are the ones declaring supernormal profits, yet any sound economy should be able to produce as many nuveau riche people as possible.
Our economy hasn’t produced new big companies similar to Safaricom, KCB, and Equity bank etc in the last 10 years. This means that something is fundamentally wrong at the macro and micro level.
Thirdly, borrowing from the HustlerFund is collateral free since no paperwork is needed. This removes the need for documents such as titles, logbooks etc that many Kenyans don’t have.
It will particularly help the youth who are most affected. The government isn’t incurring a lot of administrative costs in setting up boards, committees and secretariats to help manage the fund. All these are eliminated through use of technology.
Thirdly, one will be allowed to borrow depending on their personal credit rating going forward. The president was emphatic that this is a new beginning for borrower aptly quipping that ‘every angel has a past, and every sinner has a future’. Over 5 million lenders have been removed from being listed by the Credit Reference Bureaus .
Fourthly, a borrower will graduate from one level to another purely based on their individual credit ratings. The bands range from 0-50,000 for individuals, Sh50,000-Sh500,000 for SMEs, Sh50,000 up to Sh10 million for unregulated Saccos, and Sh10 million to Sh100 million for regulated Saccos. A new product of up to Sh50 million for individual borrowers shall be introduced in due course.
Fifth, any individual who saves every Sh2 for their retirement shall get Sh1 from the government up to Sh6,000 a year. This alone shall translate to billions of money in the medium term for so many Kenyans in the informal economy and who do not have access to any pension scheme.
President Ruto clearly demonstrates his ambitious plan to democratize financial inclusion by putting the common man and woman at the center of our economy.
There is thus need to harvest lessons learnt from the other existing funds such as the Youth Enterprise Development Fund, the Women Enterprise Fund, and the Uwezo Fund to leverage on their experience.
May Kenya’s economy flourish bringing with it many hustlers from the bottom up!!
Congratulations once again President Ruto for keeping the promise to Kenyans!