Co-operatives and SMEs, cabinet secretary, Simon Chelugui, on Thursday, March 9, explained why the government charges interest in Hustler Fund, despite President William Ruto's promise to offer interest-free loans.
In an interview with Citizen TV, the CS explained that the Fund needed to sustain itself as any other moneylender, banks, and Saccos included.
"The fund is a plan by the government to help the citizen, but it must support itself. That is why we charge interest. Money deducted aids us to cater for some expenses from the companies offering the service," he argued.
"We have lowered the interest and had to bargain with the companies to offer the services to us at a lower cost," Chelugui added.
The loan repayment period is capped at 14 days with an interest of 8 per cent per annum, 0.02 per cent per day.
Furthermore, Chelugui pointed out that the government gives Kenyans ample time to repay the loans.
"I urge Kenyans to bear with us. We must have structures to ensure that the fund does not collapse. The 14-day repayment period gives Kenyans in business time to buy their products, sell, make a profit, and repay the loan," he remarked.
His answer was in response to a clarification sought, in line with the government charging interest for Ksh500 borrowed from the Hustler Fund.
Chelugui was also asked to explain why the fund limits were not increased despite the shilling losing its value.
The CS argued that the depreciation of money was a global challenge. He pinpointed the inflation rate and other activities happening worldwide - an increase in fuel prices and the Russian invasion of Ukraine.
President William Ruto launched the fund on November 30, 2022, to bridge the gap between low-income earners and access to affordable loans.
"I want to promise the country that the hustler fund is going to be on a single-digit interest and progressively for the smaller enterprises, we will begin with just a simple fee without interest," Ruto promised on November 10, 2022.
On February 13, Ruto announced that over 18 million people took up loans, with Ksh17 billion being borrowed barely a year after the fund was launched.
However, at least 800,000 users defaulted while others saved Ksh850 million from November 30, 2022.
