William Ruto pledges Hustler Fund to boost business

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President William Ruto signs an executive order at State House, Nairobi on September 13, 2022. [PSCU]

The government will create a new fund to help small and micro businesses access capital.

President William Ruto made the promise in a speech at his swearing-in ceremony yesterday.

He did not, however, provide details of the fund, including the specific amount to be set aside or the terms of access.

He said the fund would benefit low-income groups or “scammers” as he calls them and would be rolled out through credit companies and investment groups.

“We will set up the Hustler Fund, dedicated to capitalizing micro, small and medium enterprises through chamas, saccos and cooperatives to make credit available on affordable terms that do not require collateral,” he said. he declared in his national address after taking the oath. in.

Ruto, who was elected on a campaign platform aimed at lifting low-income groups out of biting poverty, said earlier that his government would set aside 50 billion shillings each year to facilitate access to capital for the groups.

Its economic project emphasizes empowerment of disadvantaged people through the “bottom-up economic model”.

While defending the model, Ruto says he will use it to lift millions of people out of biting poverty.

“We will commit 50 billion shillings a year to provide MSMEs with 100% access to affordable finance through Saccos, venture capital, equity funds and long-term debt for start-ups and growth-oriented SMEs,” he said.

Ruto has said in the past that this model will benefit millions of unemployed Kenyans as well as small and medium businesses.

“The bottom-up method is anchored on the deliberate promotion of investments and financial instruments targeting the millions of unemployed, rip-off companies and farmer groups,” he said earlier.

Raising seed capital and accessing markets are among the biggest challenges for budding Kenyan entrepreneurs, with banks demanding collateral that most do not have, a previous study has shown.

The challenge has partly seen the rise of unregulated credit institutions in the country.

With their exorbitant interest rates and terms, microcredit from online lenders has thrown many borrowers into a debt trap.

Dozens of unregulated microlenders – many backed by Silicon Valley venture capitalists – have flooded Kenya’s credit market in response to growing demand for quick loans.

​Their proliferation has burdened borrowers with high interest rates, which escalate up to 520% ​​when annualized, resulting in increased defaults and an ever-increasing number of defaulters who have been listed negatively with credit reference bureaus (CRB).

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