The Hustler Fund has emerged as the most preferred source of financing for Micro and Small Enterprises(MSEs). According to Finaccess MSE Tracker Survey, August 2023, besides the traditional sources of financing such as savings and loans from friends and family, businesses have embraced emerging alternative sources such as Hustler Fund and digital credit providers.
In particular, among those who reported having active loans at the time of this survey, about 45% of them had borrowed from Hustler Fund, 28% from mobile banking platforms such as Mshwari and KCB M-Pesa and 23.7% had borrowed from champs or groups.
The awareness about Hustler Fund among respondents, both those running active and closed businesses, was very high, at 95.1%
The overall borrowing from the Hustler Fund among respondents was reported at 51.3%. More male than female business people borrowed from Hustler Fund. The main reason given for borrowing from this fund was for personal or household purposes such as meeting daily expenses. About 18.1 percent of respondents borrowed purely to fund business operations, particularly as working capital.
Hustler Fund’s Competitive Advantages
The main advantage cited for using Hustler Fund was the ease of access compared to other credit providers. However, 71.0% indicated that the fund needs to increase its loan size to ensure it meets the needs of borrowers.
In terms of other digital credit providers, more than half of respondents cited high-interest rates and short repayment periods as the main challenges they face while borrowing from digital credit providers.
More female than male-owned businesses were not operational at the time of the survey. A majority were located in rural areas and were owned by the respondents below 36 years.
Lack of working capital was cited as the main reason for business closure at 46.1%, and 58.8% of respondents of closed businesses had tried to acquire capital from various sources without success.
The respondents were divided in the middle on the perception of business prospects.
About 50.6% of respondents expect their businesses to perform better in the twelve months succeeding the survey, a decline from 58.3% reported in October 2022. On the other hand, the proportion of businesses that expect their performance to worsen increased from 22.6% in October 2022 to 27.3% in June 2023.
The tracker surveys were undertaken by a technical team from the Central Bank of Kenya (CBK) in collaboration with the Kenya National Bureau of Statistics (KNBS) and Financial Sector Deepening Trust (FSD) Kenya.