The Hustler Fund is a loan project led by the Kenyan government which provides instant loans to Kenyan citizens upon request. The program was launched by President William Ruto in late 2022 with the intention of providing at least $420 million in loans.
The fund, which is formally called the Financial Inclusion Fund, was launched at the end of last year as part of a government effort to rework Kenya's loan system. In the East African country, purchases tend to be made through digital loans which come with annual interest rates that can be as high as 100% or more.
The Hustler Fund is designed to provide access to affordable credit for Kenyans who are often excluded from traditional banking systems. The fund offers loans to individuals and groups, with interest rates starting at 7% per annum. The repayment period is six months from the disbursement date.
To be eligible for a Hustler Fund loan, individuals must be Kenyan citizens and have a valid national ID card. Groups must be registered with the Micro and Small Enterprises Authority (MSEA) and have a minimum of 10 members.
The World Bank has expressed interest in offering up to Ksh 20bn ($129m) for the fund, while the EU has also said it is willing to provide further support. The World Bank's funding would be conditional on the Kenyan government implementing reforms to improve the financial sector, such as strengthening the credit bureau and developing a consumer protection framework.
The Hustler Fund is part of Kenya's broader economic agenda, which is focused on creating jobs, reducing poverty, and improving the lives of ordinary Kenyans. The government hopes that the fund will help to boost economic growth by providing small businesses with access to affordable credit.
The World Bank and the EU are important development partners for Kenya. The World Bank has been working in Kenya since 1963 and has provided over $20 billion in loans and grants to the country. The EU has also been a major donor to Kenya, providing over €1 billion in development assistance since 2000.
The financial backing of the World Bank and the EU would be a significant boost for the Hustler Fund and for Kenya's economic development. The fund has the potential to help millions of Kenyans access affordable credit and start or grow their businesses. This would create jobs, boost economic growth, and improve the lives of ordinary Kenyans.
The Hustler Fund has been criticized on several grounds. First, the fund is known to have high-interest rates. The interest rates on Hustler Fund loans are relatively high, starting at 7% per annum. This could make it difficult for borrowers to repay their loans, especially if they are struggling financially.
Second; the lack of transparency. The government has not released detailed information about how the Hustler Fund is being managed or how the loans are being distributed. This lack of transparency has raised concerns about the potential for corruption and mismanagement.
Third, the inclusion criteria are problematic. Indeed, The eligibility criteria for Hustler Fund loans are relatively strict. Individuals must be Kenyan citizens and have a valid national ID card. Groups must be registered with the Micro and Small Enterprises Authority (MSEA) and have a minimum of 10 members. This could exclude some people who could benefit from the fund.
Fourth, the high risk of default. It is important to stress that the Hustler Fund loans are unsecured, which means that the government does not have any collateral to seize if borrowers default on their loans. This could increase the risk of financial losses for the government.
Despite the criticisms, the Hustler Fund has been welcomed by many Kenyans who are struggling to access credit. The fund has the potential to help small businesses grow and create jobs, which could boost the Kenyan economy.