President William Ruto yesterday presided over the first anniversary of the Hustler Fund, his signature programme, through which Kenyans can access loans at a cheap interest rate.
No doubt it was a proud moment for the president who says millions of Kenyans have been able to borrow money through the product, including seven million who has been blacklisted in the Credit Reference Bureau.
According to government data, out of the Sh50 billion offered, Sh39.5 billion has been disbursed to 19 million borrowers.
These are all impressive statistics. However, the reality is that the fund has not had the expected economic impact on the ground.
This is because apart from those able to access group loans, most borrowers qualify for between Sh500 and Sh1,000.
These amounts were touted as game changers among hustlers engaged in micro and small businesses. However, it is a fact that many of those who borrow from the Hustlers do so for consumption purposes.
Indeed, eyebrows were raised yesterday when a tuktuk operator was unveiled as the biggest borrower at Sh714,000 with many finding it difficult to calculate the number of times he has transacted with the fund and his repayment rate.
While President Ruto says the the good thing with the Hustler Fund is that unlike other online lenders, one is not condemned if he fails to repay on time, the default rate is a matter that should worry him.
Granted, the high cost of living and deteriorating economic conditions has made it difficult for ordinary Kenyans to meet their loan obligations.
For instance, according to Central Bank of Kenya statistics, the country’s largest banks have allocated a total of Sh60 billion for loan losses so far in the past nine months showing how much uncertainty there is in the economy.
However, given the amounts involved in the Hustler Fund, the default rate, which stood at 29 per cent nationally in August, translating to Sh3 billion, is not sustainable.
While President Ruto warned at the time that the defaulters will not access business/group loans, there is need to devise other ways of ensuring compliance.
However, for this to happen, the government needs to address the opaque nature of the Hustler Fund.
While a board chaired by Irene Kimani was inaugurated in March, nothing much has been heard about its work or how the fund is managed.
Indeed, it still heavily relies on the ministry of Cooperatives and Micro, Small and Medium Enterprises (MSMEs) and the infrastructure set up by the banking and telecommunication firms involved in the venture.
It is for this reason that while the President yesterday announced that the loan limits will be enhanced for regular borrowers, it will also be prudent that as the fund marks one year, it is an appropriate time to take stock of how it is being managed to ensure its future is secure.