Lenders KCB and Family Bank are currently holding Sh3 billion in savings linked to the government-backed Hustler Fund, according to the company that manages the fund.
Elizabeth Nkukuu, the acting CEO of the Hustler Fund, also known as the Financial Inclusion Fund, says the two banks are tasked with overseeing the savings generated by the product, which sees five percent of every approved loan channelled into savings.
“The funds are invested through the custodian banks at both KCB and Family Bank both for short and long-term savings,” she noted.
The savings are usually split at the rate of 70 percent and 30 percent, with the bulk going into long-term savings and the balance into short-term savings, which are accessible after a customer’s full loan is cleared.
KCB, which disclosed that it held about Sh2 billion of the Hustler Fund at the end of last year, notes that the product has anchored the growth of digital savings held by the lender.
“The Hustler Fund has contributed approximately Sh2 billion to digital savings held by the Group, reflecting its role in promoting financial inclusion and encouraging savings among customers,” KCB said.
The bank was selected by the Kenyan government to deliver its flagship financial inclusion product — the Hustler Fund — which provides affordable microcredit to the underserved segments of the economy.
The lender notes in its disclosure that it has supported the programme by building credit scoring models and disbursements using its systems and expertise.
Family Bank, which disclosed savings of Sh175 million as at December 2023, notes that its collaboration with the government on the product reflects the lender’s contribution to financial inclusion in the country.
“Partnering with the government of Kenya, Family Bank has played a pivotal role in the Hustler Fund’s success, with over 20 million Kenyans opting in and more than Sh1.5 billion disbursed, alongside savings accumulation of over Sh175 million,” Family Bank said in its 2023 annual report.
The Sh3 billion in savings indicates loan disbursements of about Sh60 billion so far.
Despite its successes in building savings, the Hustler Fund has not escaped controversy, with an audit of its books by the Auditor-General revealing a litany of issues, including discrepancies between balances in the financial statements and loan disbursement data, as well as unsupported balances.
For example, the fund failed to disclose interest earned on customer savings in the government’s financial year to June 2023.
“The examination of loan disbursement records reveals that the fund had customer savings of Sh1.6 billion as at June 30, 2023. However, the interest accrued from the customer savings was not disclosed as revenue in the statement of financial performance and statement of cash flows for the period,” the Auditor-General stated.
