Questions abound after Hustler Fund reality dawns on Kenyans

Written by on 2 December 2022

Tough questions emerged yesterday on the Hustler Fund launched on Wednesday by President William Ruto in a ceremony characterised with pomp and colour.

A cross-section of Kenyans questioned the fund’s sustainability with Nairobi Senator Edwin Sifuna maintaining the government had no means of legal recourse to defaulting debtors.

“I encourage Kenyans to take the Hustler Fund because there’s no legal recourse for the government to come after them because of not paying,” Sifuna said of a fund whose initial seed capital has not been clearly spelt out.

Some Kenyans on the social media argued that the fund had no protection in case of default while questioned the source of the loans.

Kakamega Senator Boni Khalwale yesterday told the Senate that millions of cash had already been distributed.

“A total of Sh408 million had been disbursed to 1.4 million Kenyans within the first 12 hours of the launch,” said the senator attributing the data to the Small and Medium Enterprise Development minister Simon Chelugui.

Mathare MP Anthony Oluoch raised queries on the source of the Sh50 billion fund. “We have not received our Constituency Development Fund (CDF) money and I suspect that this is part of the money that is being channeled to this Hustler Fund,” Oluoch said.

There were suggestions that the Kenya Kwanza administration could include the ‘Hustler Fund’ in the supplementary budget that is expected to be drafted and ratified by parliament in January next year.

Consolidated Fund

However, speaking to the People Daily on condition of anonymity, a senior government officer working at the National Treasury said the money will likely be drawn from either the Consolidated Fund or any of the Government reserves on a temporary basis as the fund grows to self-sustain itself.

“I don’t have the exact details. But what I suspect is that the government will borrow from the Consolidated Fund or any of its reserve funds on a temporary basis. The fund will start growing on the basis of interest earned up to a rate where it will not be required to go back to the Consolidated Fund or Reserves,” said the source.

Former Mandera senator Billow Kerrow  said  “there is nothing revolutionary about the Hustler Fund, apart from the government trying to compete with digital lenders.”

Homa Bay Town MP Peter Kaluma questioned the distinction between the existing funds which he said only needed reform and consolidation into a single Fund.

“How does the Hustler Fund differ from the Uwezo Fund, Women Enterprise Fund, Youth fund? Why not reform and consolidate these funds into one?” Kaluma asked.

On Wednesday, President Ruto clarified the differences, saying unlike the two, the Hustler Fund will not be subjected to winding bureaucracies, including the requirement for guarantors or security.

Meanwhile, many Kenyans got a rude awakening when they rushed to apply for the fund, with many learning that they were only eligible for Sh500.

Hundreds took to social media to express their frustrations for the low amounts being offered amid questions on application processes, its sustainability, source of initial capital and differences between the fund and other short-term mobile overdraft facilities.

The Sh50 billion fund has three cluster products for individual, and group lending, as well as Small and Medium Enterprise (SME) Corporate borrowing.

It will be delivered electronically without requirement for filling any manual forms through the Unstructured Supplementary Service Data (USSD) code *254# for feature phones and through a Hustler App.

According to the Kenya Kwanza manifesto, the funds are meant to promote hustler business by uplifting them from the bottom going upwards. The personal finance product or individual loan was the first to be rolled out and entitles loanees to a minimum of Sh500 and maximum of Sh50,000 at an 8 per cent interest rate per year, which is the lowest in the market.

Credit score

However, it would appear the chickens are coming home to roost, so to speak, with many of those who applied being made to wait for over thirty minutes for their loans to be processed and when finally successful, were entitled to Sh500.

“Why am I being asked to wait for 30 minutes to apply for the Hustler Fund? Kwani how long is the queue?,”asked Gabriel Oguda, on his twitter handle, perhaps an indication of the many people who were trying to access the funds.

A leading scribe, John Kamau said he wanted to see whether the Hustler Fund App works. “So, I registered, and it was easy. But I am not sure how they arrived at the decision that I can only start with Sh900,” Kamau twitted.

Kakamega Deputy Governor Ayub Savula asked what the Hustler would get, if honchos like President William Ruto, his deputy Rigathi Gachagua and Prime Cabinet Secretary (CS) Musalia Mudavadi were limited to Sh2,200, Sh1,600 and Sh2,800 respectively.

However, during the launch, President Ruto said the fund gives an estimated 8 million Kenyans who have been blacklisted by Credit Reference Bureaus (CRB) a window to borrow afresh, though their borrowing would be based on credit rating score.

According to Chelugui, 1.14 million Kenyans have so far been registered, borrowing Sh408 million from the fund barely 24 hours after the facility was launched.

Many Kenyans also questioned the rationale of using MPesa Pin Numbers during registration, yet, according to the Kileleshwa Ward Member of County Assembly (MC) Robert Alai, the system is not domiciled on the mobile money platform.

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