The government on Monday announced that Hustler Fund borrowers will enjoy enhanced loan limits following the launch of two initiatives to boost its capacity and effectiveness.
During the marking of the Fund’s second anniversary at the KICC, Nairobi, President William Ruto announced the creation of Hustler Fund behavioural credit rating system aimed at expanding credit accessibility to borrowers who repay within the stipulated 14 days.
He also launched the Bridge Loan product, which will enable good borrowers to access larger credit amounts and enjoy a longer repayment period.
The Hustler Fund credit rating system assigns all beneficiaries of the Fund a score ranging from A1 (Very good) to C3 (Very poor).
The score has nine bands: A1, A2, A3, B1, B2, B3, C1, C2 and C3 to indicate credit worthiness.
“We are assigning a credit score to every borrower so that this becomes their new collateral,” the President said.
Depending on the score, some beneficiaries will double or even triple their current limits.
He added that more than two million beneficiaries have demonstrated good borrowing behaviour, and their positive credit behaviour will reward them with higher limits based on their credit worthiness.
President Ruto said the credit score will be automatically adjusted to a beneficiary’s borrowing pattern, thus ensuring transparency in the process
The President urged banks and other financial institutions to use the credit score rating data from the Hustler Fund to assess the credit worthiness of their customers, especially those who have taken loans from the Fund.
The beneficiaries will establish relationships with banks and start gaining banking experience. Their credit history will inform their bankability.
The repayment period for the loans has also been increased from 14 days to 30 as requested by borrowers. Interest rate remains unchanged at 8 per cent a year.
The product also provides enhanced loan limits depending on the behavioural rating score, allowing beneficiaries to substantially increase their current limits.
“Good borrowers will be able to triple their credit limits. Those who are at KSh50,000 will now be able to borrow up to KSh150,000, while those at KSh5, 000 will move to 15,000 and so on,” said the President.
In the two years of the Hustler Fund, it has established credit profiles of 24.7 million Kenyans who have so far benefitted from the Fund’s inaugural personal loan product, which has disbursed over KSh60 billion.
In addition, borrowers of the Fund have saved KSh3.4 billion in mandatory savings of 5 per cent per borrowing, with 70 per cent going to long-term savings and 30 per cent to short-term.
The President also announced that long-term Hustler Fund savings will be managed by the Kenya National Entrepreneurs Savings Trust, a government pension scheme for Kenyans in the informal sector.
