A survey conducted by the Central Bank of Kenya (CBK) has revealed that Kenyans have turned to Hustler Fund to meet household needs amid rising cost of living.
According to the FinAccess MSE Survey by the CBK, 68.6pc of borrowers on the platform used the microloans to meet personal and household expenses compared to 18.1pc who used the loans for business expenses and 13.1pc for both needs.
“Among those who used the loans for personal or household purposes only, 77.7pc used it to finance daily expenses. Those who borrowed to cater for emergencies including medical/health accounted for 14.3pc while those who used the loan to finance other activities including education, personal investments and paying other loans were 7.9pc,” said CBK.
The fund which also acts as a saving was launched in November last year targeting small and medium businesses.
To date, Hustler Fund has disbursed loans amounting to Ksh 34.6 billion to 20.9 million customers and Ksh 1.7 billion in mandatory saving for all borrowers.
The survey indicates that 69.1pc of women used the loans to meet household expenses, 17.3pc for business expenses and 13.6pc.
On the other hand, 67.8pc of male borrowers used the loans for personal expenses, 19.3pc for business and 12.9 for both.
Borrowers aged between 18 and 25 years use the loans to meet personal expenses compared to 70.2pc for those aged 26-35 years and 66.3pc for those above 36 years.
Hustler Fund disburses personal loans ranging from Ksh 500 and Ksh 50,000 at a low interest rate of eight per cent per annum.
On the other hand, Biashara Loan launched on the platform at the end of first quarter this year targeting medium and small enterprises has since disbursed loans totaling Ksh 125.4 million to 38,402 groups.
“Among those who borrowed for business purposes only, 74.3pc used the funds to boost their working capital while 22pc used the funds to expand their business,” states the report.
More than half at 57.3pc of MSE are repeat borrowers compared to 42.3pc who used the credit platform just once to run their businesses.
Transport and storage sectors had the largest proportion of MSE borrowers at 69.8pc, manufacturing 53.3pc, wholesale 52.6pc, agriculture, forestry and fishing 47.1pc and accommodation and food services 44.7pc.
Nonetheless, while 71pc of borrowers want the government to increase the loan limit, the FinAccess MSE Survey indicates that 48.8pc of borrowers have defaulted, with female borrowers making up 51.5pc of defaulters and men 45.3pc.