The first Loan Product under the Fund (Personal Loan) will be rolled-out by the end of November 2022. The draft regulations of the Fund has pointed out that Saccos can also apply for loans from the Fund as financial intermediaries for on-lending to a business person or micro, small and medium enterprises.
By Hezron Roy
The Financial Inclusion Fund, popularly known as the ‘Hustler’ Fund, will have four major products: Personal Loans, Micro Loans, Small and Medium Enterprise (SME) Loans and Start-up Loans, Sacco Review has reliably established.
Speaking during the official opening of the Co-operative Alliance of Kenya (CAK) Consultative Meeting at Sawela Lodge in Naivasha, the Cabinet Secretary in the Ministry of Cooperatives, Micro, Small and Medium Enterprises (MSMEs) Development Simon Chelugui stated that the first product of the Fund, which is the Personal Loan, has been finalised and is currently undergoing public participation.
During the event which took place from November 15-18, 2022, the CS told the cooperators that after the completion of the public participation process, the first phase rollout of the Fund will be unveiled and launched by President William Ruto by the end of November 2022.
According to Chelugui, the Cooperatives, through Savings and Credit Cooperatives (Saccos), are expected to be major players through which Kenyans will access the Hustler Fund.
“The President intends to enable Kenyans at the bottom of the pyramid, who had been previously locked out of the credit facilities, to access affordable and timely credit facilities and to boost a savings culture while creating a momentum for sustainable development,” he said.
In the first phase of the fund, the loan limits will be at a minimum of Ksh.500 and a maximum of Ksh.50, 000 based on the borrower’s credit score.
The cabinet, in its second meeting held at State House, Nairobi on November 15, 2022, capped the interest rate at 8 per cent per annum, computed on a pro-rata basis.
The Cabinet also approved the legal and institutional framework to anchor the establishment and implementation of the Financial Inclusion Fund.
According to the draft regulations of the Fund by the Cabinet Secretary for National Treasury and Economic Planning Prof. Njuguna Ndung’u, individuals or groups can qualify for the loan.
Eligibility criteria for individual application are: one should be 18 years of age and above, be a holder of a Kenyan national identification card and further fulfill any other conditions that will be set by the Board of the Fund.
For Micro, Small and Medium Enterprises (MSMEs), Sacco societies, chamas, groups, table banking groups or any other association, all members are required to be 18 years of age and above.
Other eligibility criteria are that the association should be registered by the relevant government institution and should meet any other conditions as may be determined by the Board.
A financial intermediary can also apply for a loan from the Fund for on-lending to a business person or SMEs enterprises.
The financial intermediary will be required to provide matching funds of at least the amount as may be determined by the Board when entering into a lending agreement with the Fund.
Furthermore, the financial intermediary will pay an interest as may be determined by the Board, but where the financial intermediary provides marching funds, the interest rate shall be lower compared to where no marching funds are provided.
In his speech, Chelugui noted that the two sectors of Cooperatives and MSME Development are like two sides of a coin and enjoy a symbiotic relationship since while Cooperatives have over the years supported small businesses, Cooperatives are themselves small businesses.
All the loan products, under the fund regulations, should be repaid in full within the period determined in the agreement and all sums due to the Fund shall be recoverable as debts due to the Fund.
The National Treasury also outlined four offences that will see Kenyans fined up to Ksh.10 million or an alternative jail term of five years, or to both, if committed.
The offences include: misappropriation of funds, failure to give or falsify information when applying for the fund, failure by fund officials to deal with all documents, information, returns and forms relating to applications of loans or to granting of loans and communicating anything contained in the Funds forms to any persons other than those authorized by the Board of the Fund.
According to the Regulations, the Fund will be administered by a Chief Executive Officer who will be obligated to open and operate such bank accounts with the approval of the Board and the National Treasury, as well as supervise and control the day-to-day administration of the Fund.
The Hustlers’ Fund CEO will be appointed by the Treasury CS and he/ she is expected to transmit statements of accounts relating to the Fund to the Auditor General.
He or she is also expected to show the expenditure incurred from the Fund each financial year.
“In administering the Fund, the Administrator of the Fund shall prepare, sign and transmit to the Auditor-General, in respect of each financial year and within three months after the end thereof, a statement of accounts relating to the Fund and showing the expenditure incurred from the Fund, and such details as the Public Sector Accounting Standards Board may prescribe from time to time, in accordance with the provisions of the Act and Public Audit Act, 2015,” reads the regulations in part.
In his manifesto, President Ruto promised an annual allocation of Ksh.50 billion to the ‘Hustler Fund’ to enable small and micro enterprises to access affordable credit to initiate and sustain their business, as part of the ‘bottom-up’ economic model.