NAIROBI, Kenya, Nov 30 – President William Ruto says the Hustlers Fund initiative launched Wednesday will give loan defaulters who had been barred from accessing credit, a chance to start afresh.
President Ruto said Wednesday that the fund will put an end to the exploitation of Kenyans by unscrupulous lenders who have been charging borrowers exorbitant interest rates.
The Head of State stated that currently, there are about 8 million Kenyans with no access to credit because of poor history noting that no Kenyan will be excluded from accessing credit henceforth.
“This is a momentous occasion that today we have a product that does not need an application, guarantee, or approval by a committee. It just needs a citizen, his phone or her phone, and a track record and they can borrow as much as they want so long as they keep to a track record,” Ruto said.
The Head of State said that the fund will replace the traditional collateral system that has always been built behind security such as title deeds, log books, and securities.
To access the fund, Kenyans will only need to dial *254# to access Hustlers Fund starting Thursday, following its official launch by the Head of State.
To be eligible for the fund, one must be a Kenyan citizen aged 18 years and above, with a valid Identification Card and Registered Mobile number with mobile network providers like Safaricom, Airtel, and Telkom.
One will also be required to have a mobile money account that is either Mpesa, Airtel Money or Tkash, and the sim card must have been in use for more than 90 days.
The Hustlers Fund identifier is the ID number, hence one customer can not use more than one number to borrow.
Additionally, savings are secure even if a mobile device is lost because the Hustler Fund account is PIN-protected. Once the SIM card is replaced, access to the account will be restored.
The fund, launched on Wednesday, will offer four different products: start-up loans, micro-loans, SME loans, and personal loans.
With a 14-day repayment period and an annual interest rate of eight percent calculated per day, a customer who borrows Sh500 will pay back Sh501.53 after 14 days, representing Sh1.53 in interest.
When a customer borrows, the approved loan is sent to their mobile money account, deposits 95 per cent of it in their money wallet, and places 5 per cent of it in their savings account.
The five per cent that goes toward the savings plan is split into 30 per cent for short-term savings and 70 per cent for long-term (pension) savings.
If the loan is not paid back within 14 days, the customer’s credit rating is affected, and they are given an additional 15 days. If the loan is still not paid back, the interest rate increases to 9.5 per cent per year.
After, the Hustler Fund account is frozen and the borrower loses all accumulated credit scores after more than 30 days of default.
There will be no Credit Reference Bureau listing in case the loan is defaulted, hence this default will not affect the person’s credit rating with other creditors.
