The president’s advisor on matters of financial inclusion Moses Banda has revealed that Hustler Fund loan defaults has already hit Ksh2.9 billion.
This figure has surpassed the default books held at commercial banks, Saccos and microfinance banks combined.
Speaking during a recent interview, Banda revealed that the high defaults represent 29 per cent of the total amount disbursed.
“Out of the Ksh33 billion that has been lent out, the outstanding loan book is about Ksh10.2 billion. 29 per cent of the outstanding amount is not performing on time,” he said, adding that the quality of the Hustler Fund loan book has witnessed a general improvement since the introduction of credit scoring for all borrowers at the end of February.
To boost recoveries, the government has moved to link existing affirmative action funds to the Hustler Fund, implying those who default on one are barred from accessing another until they repair their credit scoring.
The government says that credit scoring under the Hustler Fund is reviewed once every four months to ensure that risk is managed prudently.
In the banking sector, the overall ratio of non-performing loans to loan book (NPL ratio) stood at 14.5 per cent at the end of June 2023, although the lenders do not segregate their loan book to show the share of mobile loans.
When rolling out its credit repair framework last year, The Central Bank of Kenya (CBK) disclosed that banks held Ksh30 billion in non-performing mobile loans as at the end of October 2022, representing 0.8 per cent of the gross banking sector loan portfolio that stood at Ksh3.6 trillion at the time.
For Sacco lenders, the non-performing ratio stood at 8.86 per cent at the end of December 2022, as revealed by the latest data from the Sacco Societies Regulatory Authority (Sasra), with their lower default rate attributed to their model of lending which has guarantors and collateral tied to members’ shares.
The Hustler Fund started operations at the end of November 2022, advancing personal loans as low as Ksh500.
So far, it has disbursed Ksh33.3 billion worth of loans to Ksh17.2 million borrowers, of which Ksh7.6 million are repeat borrowers.
The fund has mobilised about Ksh1.8 billion in savings, 30 per cent of which are accessible after one year while the remaining 70 per cent is ring-fenced towards borrowers’ pensions.
By Vostine Ratemo
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