President William Ruto recently launched a new digital financial inclusion initiative called Biashara loan aimed at enabling micro-SMEs access to loans at low interest rates.
The Biashara loan is part of the Hustler Fund Personal Loan Product, which is a revolving fund that provides credit to small businesses and individuals who have no collateral or formal banking history.
The individual micro enterprise loan product launched will lend between Sh10,000 and Sh200,000 at seven per cent interest calculated pro-rata or daily.
In the President’s own words, there will be competitive loan products rolled out of three months, six months and nine months. This will depend on the nature of business an applicant does. These are giant steps in efforts to ensure financial inclusivity to those at the lower end of the pyramid.
It is a journey I have been onto for the past five years trying to ensure that a population that had lost hope in life because they could not access credit due to lack of collateral or a pay slip are empowered to realise a larger economic transformation.
As someone who grew up in Kibera slums, I saw the injustice. We were not part of the economy and yet people in the slums are really working hard but aren’t recognised.
That is why I believe in financial inclusivity. How could we bring people living in the slums to have their own Sacco when they are mostly a preserve of salaried people or those with big businesses? If you are mama mboga, a carpenter or mtuwamjengo, many Saccos would avoid you.
Because of that, an idea was born five years ago to have a Sacco for hustlers, those who live at the bottom of the pyramid. That is how Shofco Sacco was launched. It was a big risk but now, it has more than 12,000 members and has given out Sh550 million in form of loans.
This is not donors or investors’ money but rather Sacco shareholders and member contributions and I have seen people from the slums buying cars for taxi and paying school fees. Women who were selling tomatoes now have wholesales.
Dignity is important. Money is power and to have access to capital is also power. Empowered people have dignity and a sense of worth. It is not something we can take lightly given how the poor are marginalised for lack of connections.
I am happy that government has realised the true potential that lies in the poor. It is important that every Kenyan supports the government’s plans to support Kenyans with products that are responsive to their enterprises.
The private sector too has a chance to come up with innovative products towards this end. However, the newly-launched loan product should not lose sight of how to empower this demographic since even the Sh500, seen as small, can make a difference.
For a trader selling sugarcane on the streets, Sh500 could just be enough to start a business and if he has focus and vision, he can grow it to a bigger venture.
It is a great lesson on financial inclusivity not just for government but for the financial institutions, some of which have always shunned the slum community. There exists a lot of wealth within this group and it is high time banks came up with tailor-made products to tap into it or keep losing out.
What’s more, over 46 per cent of Kenyans live in informal settlements as per the 2019 National Population Census, with 60 per cent of Nairobi’s population domiciled in the slums. These are huge numbers that can’t be wished away.
President Ruto on November 30 last year launched the first phase of the Hustler Fund. With support from Kenyans, the government can create several opportunities for millions of people at the base of the wealth pyramid. It is achievable with the right effort, attitude and foresight as a nation.
The writer is the founder and CEO of Shofco, and a member of the USAid Advisory Board. Twitter @KennedyOdede