CBK Reveals That Hustler Fund Majorly Benefits The Rich More
According to new data from the Central Bank of Kenya and the Kenya National Bureau of Statistics, 35.8 percent of individuals who applied for loans were in the top wealth quintile.
Only 18.7% of the lowest wealth quantile accessed the fund in 2024, contradicting the government’s efforts to enhance access to funding for low-income people.
“Informal group usage remains relatively stable across wealth quintiles, with slight decreases as wealth increases,” the report reads in part.
“Hustler Fund is particularly significant among middle- and higher-income groups, reflecting its appeal as an accessible credit option.”
According to the 2024 Finance Report by KNBS, CBK, and Financial Sector Deepening Trust (FSD Kenya), in order for such monies to be used as intended, effective financial inclusion will necessitate financial products and services that meet consumer expectations and welfare.
“Improving the terms and conditions of the hustler fund loan facility, especially for youth and lowest wealth quintiles, could accelerate the Bottom-Up Economic Transformation Agenda,” the report noted.
CBK adds that poor customer service hinders utilization, especially among microfinance institutions and insurance account holders, while mobile bank accounts recorded the least complaints.
Overall in 2024, 28.9 percent of the adult population used the hustling fund, with the mobile money loan facility being more popular in metropolitan areas with higher-income individuals who are formally or informally employed.
According to the report, 28.9% of Kenya’s adult population—or 8.1 million people—used Hustler Fund loan services in 2024.
Urban residents were the most active users of Hustler Fund services, with 35.4% of the urban population taking out loans, compared to 24.2% in rural areas.
The highest wealth quintile accounts for 35.8% of total usage, while the lowest wealth quintile accounts for 18.7%. Age also has a big impact on loan acceptance.
The majority of users, 39.4 percent, are between the ages of 26 and 35, with those over 55 making up the smallest sector, 11.2 percent.
In 2024, the everyday use of mobile money climbed from 23.6% in 2021 to 50.2%.
This shows that customers rely on mobile money and mobile banking to conduct transactions and manage liquidity.
According to the research, there has been a small improvement in formal financial access in Kenya, although certain groups continue to face obstacles in financial inclusion.
Formal financial access increased to 84.8% in 2024, from 83.7% in 2021.
The progress is partly due to advances in digital technology, which have practically erased the gender gap in access to financial services.
Despite advances, 9.9% of Kenyan adults remain financially disadvantaged. Rural kids make up a sizable component of this demographic, accounting for 45.5%.
Barriers to inclusion include a paucity of mobile phones (64.1%) and national identity cards (51.5%).
Kiambu, Nairobi, Kirinyaga, Nyeri, Isiolo, and Mandera are the most financially inclusive counties, whereas Turkana, West Pokot, Elgeyo Marakwet, Trans-Nzoia, Migori, and Narok have the greatest levels of financial exclusion.
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Brick-and-mortar bank accounts and SACCOs have shown growing demand, but digital financial services have shown mixed results. Growth in mobile money, mobile banking, and overdraft services such as Fuliza has slowed.
However, digital microfinance institutions, including “buy now, pay later” schemes, have benefited from the regulation of Digital Credit Providers.
Despite the uptake, repayment has not increased at the same rate, requiring the government to change loan terms.
Last week, President William Ruto said that more than two million borrowers in the state-run fund will soon have expanded borrowing limits and longer repayment periods.
CBK Reveals That Hustler Fund Majorly Benefits The Rich More
