As the Muslim holy month of Ramadhan draws to an end, Kenya’s President Dr William Ruto has promised to make the Hustler Fund Shariah-compliant. The president says that this move will further enhance financial inclusion in Kenya.
“We will also adjust other Government financial instruments to comply with the Islamic Law,” President Ruto said on Monday evening at State House when he hosted an Iftar Dinner.
Islamic personal loans are similar to conventional loans in that you get a set amount of money upfront that you pay back over time, along with any fees. The key difference is that Islamic personal loans follow Sharia law and thus don’t involve interest charges.
According to the president, more than seven million Kenyans have benefited from the Hustler Fund since it was launched.
The Hustler Fund is a credit facility brought to Kenyans by the Kenya Kwanza government. It was launched by the government and facilitated by private sector partners. Since launch, the fund has seen significant uptake with 2 million people who were not interacting with M-Pesa coming back into M-Pesa and borrowing.
However, some of those who have borrowed have defaulted on payments. The value of Hustler fund loan defaults stood at nearly Sh10 billion in the first 11 months . A Central Bank of Kenya (CBK) survey found a need to increase the loan repayment period.
Treasury put the overall repayment rate of loans disbursed via the fund at 73 per cent. At the start of November 2023, the fund had disbursed Sh36.6 billion and realised Sh2.3 billion in savings. Of the 21.3 million customers who borrowed, 7.5 million became repeat customers. Last year in October, President Ruto said he was engaging stakeholders on the need to increase the credit limit.
