Hustler Fund Loopholes as Bank-to-Mobile Charges Return

There is a loophole in the Hustler Fund individual loan product that gives defaulters an advantage in accessing their savings early as compared to “good” borrowers who pay their loan within 14 days.

A review of terms and conditions of the Hustler Fund Savings and Loan Product has revealed that while “good” borrowers will have to wait for 365 days to access their savings, anyone who pays back their Hustler Fund loan on the 15th day onwards - exactly one day in default - will have a chance to immediately withdraw their savings. 

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Early access to the savings, which are equivalent to 1.5% of the principal amount, means some borrowers could opt to default for just a day or so and pay the very minimal interest for the additional day in default but withdraw a larger amount in form of the savings. 

For example, if you borrow Ksh10,000, you will have to pay back an interest of Ksh30.67 in six days. On the 15th day, you will have accrued an additional interest of Ksh2.6 which brings the total interest to Ksh33.27. 

This is against the advantage of being able to access the short-term savings deducted from the principal amount (Ksh150) - all at the cost of Ksh2.6.

Meanwhile, the “good” borrower will have to wait for 365 days to access the same Ksh150 - effectively being “punished” for paying on time.

It is, however, not clear whether the amounts held in short-term savings will earn interest which would then be advantageous to the “good” borrower. 

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Also, there is the question of when the government will be applying the pension contribution matching at a rate of 2:1 (Govt contributes Ksh1 for every Ksh2 saved for pension) which is only applicable to “a customer who has not defaulted on a loan”. 

Critics argue that this may disincentivize borrowers from saving, dealing a blow to one of the objectives of the fund - building a savings culture among Kenyans. 

Cheaper Safaricom Postpay Airtime, Data

Meanwhile, Safarosom has announced the review of its monthly plans where the All-in-One and PostPay plans are set to start enjoying lower prices. 

The changes are as follows:

1. Go Monthly 1K plan to go for Ksh1,000, down from Ksh1,050
2. The 2K Plan to go for Ksh2,000 down from Ksh2,100
3. The 3K Plan to go for Ksh3,000 down from Ksh3,150 
4. The 5K plan to go for Ksh5,000 down from Kshh5,200
5. The 10K plan to go for Ksh10,000 down from Ksh10,430.
6. All Go Monthly customers to enjoy free 2GB YouTube every month.
7. If you are on the 5K plan, you will enjoy unlimited data capped at 45GB, after which you will browse at 3Mbps speeds. 
8. If you are on the 10K plan, you will enjoy unlimited data capped at 100GB, after which you will browse at 3Mbps speeds. 
9. Go Monthly customers can use their minutes to call across all local networks at no extra charge as well as make calls to China, India, USA, and Canada.
10. The plans will have a validity of 30 days, but now only data will roll over upon renewal of PostPay or purchase of another monthly bundle. Previously, minutes would also be rolled over
11. From a minimum of Ksh500 per month, you can opt for a minutes-only or bundles-only Go Monthly plan.

“By consolidating our monthly plans, we seek to simplify our product offering while enabling our customers to enjoy a digital lifestyle in an affordable manner,” Safaricom CEO Peter Ndegwa said in a statement that indicated the new changes were revising a Juky 2021 price increase. 

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It was in response to the increase in excise duty on airtime and telephone services from 15% to 20%.

CBK Announces Return of Bank-to-Mobile Money Transfer Charges

In a related development, the Central Bank of Kenya (CBK) has announced that bank-to-mobile money transfer charges are set to resume on January 1.

This will be some 34 months since the charges were suspended on March 16, 2020, just three days after the first Covid-19 case was confirmed in Kenya. 

The move that was part of measures by the government to discourage the physical exchange of cash benefited consumers and e-commerce users immensely as they could easily move their cash between their bank accounts and mobile money wallets at no cost. 

It was largely seen as a permanent decision given that most of all other Covid-19 containment measures had been removed. In reinstating the charges, the CBK however slashed them by 50%.

“The revised charges for bank-to-wallet and wallet-to-bank transactions will be announced by respective Payment Service Providers (PSPs) and banks and will be effective from January 1, 2023,” the CBK stated in a notice on Tuesday.  

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The CBK stated that between March 2020 and October 2022, 6.2 million new mobile money users registered for the service, representing a 527% in the number of Kenyans using mobile money services. 

“The monthly volume and value of transactions between PSPs and banks increased from 18 million transactions - worth about Ksh157 billion - to 113 million transactions; with Ksh800 billion.”

Banks and telecommunications companies have been pushing for the reinstatement of these fees that form a significant proportion of their revenues.