Govt Raises Hustler Fund Borrowing Limits - Money Weekly

In this week’s edition of Money Weekly, Hustler Fund borrowers have a reason to smile after the borrowing limits of those with a positive repayment history was doubled, returns on Bank fixed deposits have hit a three-year high of 7.16%, fuel prices remain unchanged, Kenyans living abroad sent home Ksh44 billion in January and some banks are now scrapping bank to mobile transfer charges amid uproar from customers on top of worrying bank fraud reports.

As we do every Thursday, here's our weekly summary of the top money news from the last seven days that could impact your money.

Let's dive in...

Kenyans Sent Ksh44 Billion Home in January

Kenyans living abroad sent USD349.4 million (Ksh43.7 billion) in January, a 3.2% increase from USD338.7 million (Ksh42.4 billion) in the same month in 2022. 

According to the Central Bank of Kenya (CBK), the United States remains Kenya's primary source of remittances. Despite this, the Middle East is gradually becoming one of the most important sources of remittances.

Individuals from the United States, the United Kingdom, and Saudi Arabia account for approximately three-quarters of all annual inflows into Kenya.

According to CBK, total combined inflows totaled USD4,039 million (Ksh505.9 billion) from January 2022 to January 2023, a 6.9% increase from USD 3,778 million (Ksh473.2 billion) in January 2022.

The United States continued to be the largest source of remittances into Kenya, accounting for 58.5% of total inflows during the first month of the year.

A study by international money transfer service, WorldRemit, found that Kenyans living abroad were compelled to cut their spending to afford to send money to their loved ones in Kenya during this period.

Read Also: Money Hack: Make Your 2023 Spending Plan

Fuel Prices Remain Unchanged for the Fourth Month in a Row

According to new guidelines published on Tuesday by the Energy and Petroleum Regulatory Authority (EPRA), fuel prices will remain unchanged for the next month.

The energy authority emphasised that diesel and super petrol costs had been cross-subsidized. In this case, diesel users will pay less while petrol users will pay more.

Kerosene will continue to cost Ksh145.94 per litre at retail, with the government providing a Ksh19.41 subsidy per litre to protect customers from high prices.

EPRA has kept the retail price of petrol in Nairobi at Ksh177.30 per liter, while diesel remains at Ksh162.

In Mombasa, a litre of petrol will cost Ksh174.98, diesel Ksh159.76, and kerosene Ksh143.69. 

A litre of petrol will cost Ksh177.50, diesel Ksh 162.70, and kerosene 146.66 in Kisumu.

Even though the landing cost of the commodities decreased slightly, the energy regulator retained the fuel prices.

Super Petrol imports had an average landing cost of USD659.87 (Ksh82,892.87 according to the current exchange rate) down 0.12% from USD660.65 (Ksh82,990.85 according to the current exchange rate) in December 2022.

The price of diesel dropped from USD818.45 (Ksh102,813.69) to USD779.49 (Ksh97,919.53), a 4.76% difference.

Kerosene's landing cost also dropped from USD816.62 (Ksh102,583.80) to USD774.99 (Ksh97,354.24), a 5.1% decrease.

Read Also: Nairobi Transport Agony: Most Affordable Ways to Commute

Cost of Medications at KNH for Kidney Patients Doubles

The cost of anti-rejection medications for Kenyatta National Hospital kidney transplant patients has nearly doubled.

Tacrolimus tablets are now Ksh64 rather than Ksh30 as they were in December of last year, and Cyclosporine tablets are Ksh260 rather than Ksh185. Mycophenolate now costs Ksh140 per tablet rather than Ksh100.

Considering that the National Health Insurance Fund (NHIF) does not cover post-transplant medications, the rise in the cost of medications that are needed to prevent the rejection of donated organs has caused concern among the majority of patients.

Patients have been buying medicines from KNH for years at discounted prices, but now they are being compelled to dig even deeper into their pockets, increasing the monthly cost of Tacrolimus alone by at least Ksh6,600.

Read Also: Family Health: Budgeting for Healthcare Costs in Kenya

Govt Raises Borrowing Limits for the Hustler Fund

Borrowing limits for the Hustler Fund, the government's initiative to promote financial inclusion, have been doubled for existing borrowers.

This is according to the Cabinet Secretary for Cooperatives and MSME Development Simon Chelugui, who stated that the increase is due to the Fund's rapid growth in the few months since its inception in November 2022.

“With 18.8 million Kenyans having subscribed to the Financial Inclusion Fund since it was launched, the 100% increment is also in line with the pronouncement by His Excellency President William Ruto last week.

“As we speak, many Kenyans have already seen their limits double up because we effected the changes in the last couple of hours; for instance, those who were getting, let’s say, Sh3,000 are now getting Sh6,000. And those who were getting Sh5,000 are now getting Sh10,000 which means by the middle of the year the ones with the highest limits will be inching towards Sh50,000 which is the maximum for this product,” CS Chelugui said in a statement

The CS added that the increment would only be applicable to borrowers who had borrowed regularly and faithfully repaid their loans.

When granting extensions to lending restrictions, the frequency of borrowing and repayment will also be considered.

“The increment is based on individual’s record will Hustler Fund; one’s loan limit will be based on how regularly one borrows and repays their loan facility,” he said while adding that limits will be reviewed after every four months to reflect the an individual's borrowing and repayment history.

This is while revealing that the second phase of the Hustler Fund would be launched soon by the head of state. Dubbed "Micro Credit", this bigger credit facility is aimed at startups, groups and Saccos which will be allowed to borrow on behalf of their members. It will have a minimum loan amount of Ksh250,000 and a maximum of Ksh2.5 million, the CS stated.

The fund has no processing fees and is accessible via the USSD number *254#.

Read Also: How to Apply for the Hustler Fund on Your Mobile Phone

Bank Fixed Deposit Rates Rise to 7.16%, a Three-year High

The average fixed deposit rate for banks has risen to a three-and-a-half-year high of 7.16% in response to the Central Bank of Kenya's (CBK) increase in the base lending rate and depositors' growing interest in purchasing government securities.

To combat excessive inflation, the CBK raised the base lending rate by 1.75 percentage points last year to 8.75%, signaling a higher cost of borrowing in the economy for both banks and borrowers.

As a result of the subsequent rise in short-term government securities rates to highs of between 4% and 5%, banks were forced to adjust the interest rate on non-current deposits in order to encourage larger depositors to keep their money with them rather than lend it out to the State.

According to CBK statistics, lenders raised the average lending rate from 12.16%  to 12.7% in December 2021 in order to maintain their margins. Nonetheless, once processing costs are factored in, the actual cost of a loan paid for by consumers is significantly higher.

Deposits held for more than three months earned 7.93% interest in December, while deposits held for less than three months earned 7.38%

Demand deposit rates were 1.93%, up from 1.16% the previous year, while savings rates were 3.55%, up from 2.55% the previous year.

Read Also: Where Do I Keep My Savings? Fixed Deposit Account

Other Money News

• Equity Bank customers have been advised to exercise caution and avoid providing personal information when transacting online.
  
  This is is happening at a time when con artists are tricking more people into giving them their personal details such as PINs and ID numbers, which they then use to withdraw money from their accounts.

• On Wednesday, January 15, the I&M Bank announced a waiver for its mobile wallet-compatible digital banking platform, I&M On The Go (OTG). Since reinstatement by the Central Bank of Kenya (CBK) in January 2023, I&M Bank becomes the first bank to offer zero fees for bank-to-M-Pesa and Airtel Money transfers. The bank also revealed plans to exempt Telkom users from paying for T-Kash transactions.

• Foreign investors put a net amount of Ksh301 million into the Nairobi Stock Exchange NSE ahead of full-year results reports, which are expected to show higher profits. They were particularly interested in purchasing shares in banking institutions. The net inflows helped to recoup some of the foreign capital that had been evaporating from the stock market in recent weeks as a result of the constant flight to the United States, where interest rates on its bonds have been raised to combat excessive inflation.