NAIROBI, Kenya May 21 – The delivery of President William Ruto’s flagship Hustler Fund, officially known as the Financial Inclusion Fund, hangs in the balance after the National Treasury allocated only Sh1 billion in the budget estimates for the upcoming financial year, far below the Sh6 billion requested.
The move threatens to derail the Fund’s mission to support millions of micro, small, and medium enterprises (MSMEs) across the country which currently boasts over 25 million beneficiaries.
The sharp budget cut comes as officials admit that billions loaned out in the fund’s initial rollout may never be recovered.
Appearing before the National Assembly’s Trade, Industry and Cooperatives Committee, Principal Secretary for MSMEs Susan Mageni disclosed that the government is considering writing off up to Sh6 billion loaned to defaulters who took out loans in November and December 2022, at the height of the Hustler Fund’s launch.
“These are people who borrowed once and vanished.We have about nine million repeat borrowers who continue to engage with the fund, but when we introduced our credit scoring mechanism, we found that around 4.5 million are scoring in the A and B categories meaning they are good borrowers. The others, especially those who borrowed once and never returned,” Mageni stated.
The revelation cast doubt over the viability of the fund as lawmakers grilled the PS on the prudence of pumping more public funds into a programme with such high default rates, echoing growing concerns about the fund’s sustainability.
“You want more money to lend to Kenyans, yet you can’t recover what was already disbursed?” asked Committee Vice Chairperson Hon. Marianne Kitany (Aldai).
Committee Chairperson Benard Shinali (Ikolomani ) was equally skeptical, questioning whether the Hustler Fund deserved such prioritization amid competing national needs.
“Kenyans have a lot of challenges that require government attention, including infrastructure. Why should billions of shillings be allocated to be loaned out?” he posed.
PS Mang’eni defended the fund’s performance and outlined a series of corrective measures. She explained that the State Department is now using a tiered credit scoring system to segment borrowers based on repayment behavior.
“When we roll out new products, we will begin by targeting only those who have shown good credit behavior. These Kenyans will benefit from higher limits and additional loan types like ‘bomayangu’ a new product in the pipeline,” she said.
However, Mang’eni admitted that legal constraints have hampered the state’s ability to enforce debt recovery among defaulters.
“If we are to do forceful recovery, the challenge will be the law. So we are also reviewing the legal framework to determine at what point we can introduce recovery mechanisms,”she stated.
The PS confirmed that her office had recently written to Hustler Fund service providers, alerting them of changes in borrower targeting and fund disbursement, signaling a shift towards performance-based lending.Still, with only a fraction of the requested budget approved, the programme’s future is uncertain.
“The Hustler Fund requires Sh5 billion but was only allocated Sh1 billion. We request full reinstatement to meet the growing demand for financial products,” Mang’eni decried.
Launched with much fanfare in late 2022 as a key pillar of President Ruto’s “bottom-up” economic agenda, the Hustler Fund aimed to democratize access to credit for low-income earners however its sustainability dwindles over budgetary allocation and repayment falters.