The National Treasury has issued the National Assembly a carte blanche in appropriating resources to the Financial Inclusion Fund, popularly known as the Hustler Fund.
The Prof Njuguna Ndung’u-led Treasury has done away with the Sh50 billion funding ceiling that had been prescribed in the draft regulations, leaving it to the discretion of the National Assembly to determine the maximum resources to be gobbled up by the fund.
The regulations are in Legal Notice 213 published by Prof Ndung’u, on November 23, 2022.
Section Six of the final Hustler Fund Regulations provides that “the capital of the Fund shall be as appropriated by the National Assembly or from any other source provided for under regulation 4 of these Regulations”.
This is a stark departure from the provision in the draft regulations which stated that “the maximum capital of the Fund to be appropriated by the National Assembly shall be 50 billion shillings”.
The National Treasury has also done away with the ceiling that had been prescribed in the draft regulations with regard to the maximum amount of the fund’s capitation that can be taken up by administrative expenses.
Whereas the draft regulations provided that Section 21 of the draft regulations provided that “the administrative costs of the Fund shall not exceed three percent of the approved budget of the Fund,” the final regulations simply provide that “the administrative costs of the Fund shall be met through appropriations of the State Department responsible for matters relating to Micro, Small and Medium Enterprises” without indication of a ceiling.
Another major change in the final Hustler Fund regulations is that persons who default on loans will be slapped with an interest rate 150 basis points higher (1.5 per cent higher) than the standard interest rate of eight per cent.
The final regulations have also widened the product array offered by the Hustler Fund to include retirement benefits. The draft regulations had provided that the fund would offer credit, saving, insurance and investment products.
The Kenya Kwanza administration has repeatedly called for review of primary retirement benefits pillar through enhancement of statutory deductions to the National Social Security Fund (NSSF) in line with the NSSF Act of 2013 which sought bump up contributions to six per cent of one’s pensionable income.