Banks eye windfall from Hustler Fund billions

Commercial banks are lining up to draw dividends from the Hustler Fund which is set for launch on Wednesday.

For the banks, the Hustler Fund is set to full proof credit scoring as a measure of risk posed by borrowers allowing the lender’s to establish both good and bad borrowers by leveraging a State backed fund.

Kenya’s largest bank by asset base Equity for instance sees an opportunity to grow its loan book by selecting good borrowers off Kenyans successfully on boarded onto the Hustler Fund initiative.

Last week, the bank announced it is considering establishing a Ksh.250 billionrevolving fund targeted at successful borrowers’ from the Hustler Fund.

“Instead of crowding the grassroots movement, the government can support the people, mobilize and de-risk them and they can graduate to the hustler bank,” said Equity Group Managing Director James Mwangi.

“Equity is the home for hustlers. Our 18 million customers reflect a very significant portion of the population.”

For NCBA which represents Kenya’s largest digital lender, the bank is set to cut its spending on marketing its digital loan products as the government deploys its model to make Hustler Fund loan disbursements.

“We have spent quite a bit of money marketing M-Shwari and Fuliza. We don’t need to anymore as digital lending is now becoming the mainstay. For people who have not used Fuliza & M-Shwari, the moment they use the Hustler Fund, they will get hooked to the fact that it is convenient and easy,” said NCBA Group Managing Director John Gachora.

“We are proud that we tested a thesis, it worked extremely well and now the government has taken that business that we build and will now deliver the biggest social impact fund the country has ever seen.”

The first phase of the Hustler Fund will enable individuals to take unsecured loans of between Ksh.500 and Ksh.50,000.

The pricing of the facility has been set at an annual interest rate of eight per cent with loan limits being determined by credit scores prescribed to each individual borrowers.

Later on, the government is expected to set higher loan limits to support disbursements to Sacco’s, Chamas, medium and large enterprises.