Report: Hustler Fund Cash Not Enough to Start a Business

CBK MSE Survey on Hustler fund

The majority of Hustler Fund Loan borrowers use it for personal and household purposes. It was found there is a need to increase the hustler loan amounts so that the fund can support the starting of new enterprises as well as boost working capital for existing businesses. Currently, the Fund disburses personal loans ranging from KES 500 and KES 50,000.

The finding was from a survey done by the Central Bank of Kenya and its partners. According to the survey,  68.6 percent of borrowers use the money for personal and household needs. On the contrary, only 18.1 percent borrowed from the Hustler Fund purely for business. There was a small unique group (13.3 percent) of those surveyed who used the cash for both business and personal purposes.

Further, the majority (77.7 percent) of the borrowers used the money to meet their daily expenses. 14.3 percent used the cash for Medical emergencies. Only (7.9 percent)a small portion used the funds for personal investment or education. This shows the loans are mostly for sustenance and have done little to improve individuals.

It also stood out that borrowers from the Hustler fund tend to be youthful. Most of the lenders were found to be below the age of 36 years. Kenyans aged between 18 to 25 have accessed cash for hustler funds more than any other demographic.

Additionally, female borrowers were more than men. 43.6 percent of women were found to have used the Hustler fund for personal use compared to 40.6 percent of men. However, more men (27.2 percent) had borrowed thrice compared to women (21.6 percent).

Chart from CBK Survey

Hustler Fund for Business Purposes

For those who cited business use, the majority (74.3 percent) used the hustler fund loan to boost their working capital. 22.0 percent of business owners used the funds to expand their business. Very few people used the fund to either start a new business or pay another loan.

As such, the business owners interviewed suggested a need to increase the hustler loan amounts so that the fund can support the starting of new enterprises. Business owners also suggested a need to increase the loan repayment period. Similar to personal loans, business owners seem to use the loan to simply keep their businesses afloat.

A majority (95.1%) of business owners are aware of the Hustler Fund. Despite the high level of awareness of the fund, only about half (51.3%) had ever borrowed from the fund. Notably, more male business owners (54.0%) had ever borrowed from the fund compared to female owners (49.5%).

Chart from CBK Survey

69.8% of business owners in the Transport and Storage sector borrowed from the Hustler Fund. Whereas, 53.3 percent in manufacturing, and 52.6 percent in wholesale also borrowed from the fund for business.

The Fund was established under the Public Finance Management (Financial Inclusion Fund) Regulations, 2022. Ease of access was found to be one of the reasons it is used. Hustler fund is currently accessible via USSD code *254# or mobile app.

Earlier this year, Safaricom’s CEO Peter Ndegwa reported the fund had brought back 2 million users to M-Pesa.

The Survey established that at least 48.8 percent of the Hustler Fund borrowers either paid late, missed a payment, or paid less amount in the last three months. Upon being asked whether they are aware of the consequences of failed or delayed payment, only 54.9 percent of the respondents said yes.