Government Vows to Transform Hustler Fund into Shariah-Compliant Model

President William Ruto, on Monday, April 8, made a significant announcement, declaring that his administration would undertake reforms to ensure the Hustler Fund aligns with Shariah principles.

Speaking during the Iftar dinner held at State House, Nairobi, the Head of State disclosed that he was responding to requests from Muslim leaders regarding the need for financial products that adhere to Islamic law.

Ruto urged Muslim leaders to draft a proposal outlining how other government financial products could also become Shariah-compliant.

"The current financial system is not accessible to many Muslims. I have received this request for the first time, and I assure you that I will ensure the Hustler Fund is Shariah-compliant so that more Kenyans can benefit," pledged Ruto.

With over seven million Kenyans already benefiting from the Hustler Fund, the President anticipates that this move will extend the reach of the initiative even further.

"We will also adjust other Government financial instruments to conform to Islamic Law," he affirmed.

The Hustler Fund provides financial support to individuals and organizations for entrepreneurial endeavors. Ruto's commitment to revamp the Hustler Fund is expected to particularly impact groups registered under the Micro and Small Enterprises Authority (MSEA) who seek funding from the initiative.

These groups typically receive loans ranging from Ksh20,000 to Ksh1 million at an interest rate of 7 per cent per annum. However, interest rates have been a contentious issue in Shariah Law due to concerns of exploitation.

While Islamic law prohibits Riba (Interest), an exception exists for Murahaba, which operates on a cost-plus financing model. Under Murahaba, both parties agree on the cost and markup of an asset, often adjusted for inflation, to compensate lenders for the time value of their money without generating excessive profit.