The government is considering writing off Sh6 billion in bad debts linked to the Hustler Fund, after at least 10 million Kenyans defaulted on personal loans borrowed under the program soon after its launch in late 2022.
Appearing before the Departmental Committee on Trade, Industry and Cooperatives on Wednesday, Micro, Small and Medium Enterprises (MSMEs) Development Principal Secretary Susan Mang’eni revealed that the defaulters had borrowed small amounts, in some cases as little as Sh500, and failed to repay.
“Repayment rate for personal loans is at 80 per cent. However, we had at least 10 million Kenyans who borrowed either once or twice in November and December 2022 and they did not pay,” said Mang’eni. “The money at risk here is about Sh6 billion.”
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The PS disclosed that out of Sh65.5 billion disbursed so far through the Hustler Fund, only Sh53.8 billion has been recovered.
Borrowers who defaulted have been categorized as high-risk and are currently barred from accessing further credit under the initiative.
Despite the outstanding arrears, MPs questioned why the ministry is requesting an additional Sh5 billion, even as a substantial amount remains uncollected.
“If the department has unrecovered billions and a Sh65 billion revolving fund, why does she want us to give her additional Sh5 billion?” posed Aldai MP Marriane Keitany.
Kajiado South MP Samuel Parashina dismissed the Hustler Fund as a failed project, citing poor management and lack of transparency.
“We have never been satisfied with these hustler funds. This money is a joke and we would like you to take it to other funds,” he said.
The Auditor General Nancy Gathungu also raised concerns in her audit of the 2023/2024 financial year, revealing that the fund has non-performing loans amounting to Sh8 billion, much of which has not been serviced for over a year. She warned that 64 per cent of loans remain unpaid, signaling potential financial risk to the state.
In her defense, PS Mang’eni told the committee that over 4.9 million Kenyans have undergone means testing and are now eligible for insurance premium financing, as part of broader financial inclusion efforts under the fund.
The Hustler Fund, a flagship initiative of President William Ruto’s administration, was launched to provide affordable credit to individuals and small enterprises. However, growing defaults and accountability concerns now threaten to derail its long-term sustainability.