Over Sh31 million in Hustler Fund loans disbursed to minors, some as young as 10 days old - audit
Findings indicate that thousands of borrowers were either below the legal age of 18 or had not yet been born when the funds were disbursed.
Over Sh31 million was disbursed to individuals who were either underage or had not yet been born at the time of receiving Hustler Fund loans, an audit by Auditor General Nancy Gathungu has revealed.
The audit of the Hustler Fund loans disbursed in the financial year ending June 2024 has uncovered significant discrepancies in the dates of birth of some beneficiaries, with findings indicating that thousands of borrowers were either below the legal age of 18 or had not yet been born when the funds were disbursed.
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According to the report, a total of Sh31,817,085 was loaned to 44,167 individuals whose birth records suggested they were either underage or yet to be born by June 30, 2024.
Auditors also flagged 253,717 registered customers whose dates of birth ranged from July 1, 2024, to December 2073—well beyond the loan disbursement period—raising concerns about possible misrepresentation and mismanagement of funds amid high default rates.
“Review of the customers and opted-in data sets provided revealed customers who were below the required mandatory age of 18 years and others whose birthdates were in the future after June 30, 2024,” reads the audit report.
Further scrutiny established that 1,377 registered customers were aged between 10 days and 17 years. Out of these, 1,186 individuals received loans amounting to Sh681,395, despite being legally ineligible for the programme.
“The records are therefore unreliable, and the resultant data in the systems may not have adequate controls. In the circumstances, loan agreements with underage individuals are potentially unenforceable and increase the likelihood of default,” Gathungu said.
Among the three contracted payment service providers for the Hustler Fund, Safaricom had the highest number of registered underage and unborn customers, totalling 244,566. Airtel followed with 10,128, while Telkom had 398 registered cases.
Over-reliance
The audit further raised concerns over the government’s heavy reliance on these service providers for the fund’s operations, pointing to a lack of an independent loan management system.
“The Fund is fully dependent on the service providers’ loan management systems, resulting in various challenges that may have been avoided if the Fund had its own loan management system. Further, management did not have a credit policy and collection strategy for non-performing loans,” reads the report.
The concerns come against the backdrop of an increasing default rate among Hustler Fund beneficiaries, casting doubts on the programme’s sustainability and recoverability of loans.
By June 2024, the government had allocated Sh12.8 billion for the fund, with Sh12.4 billion earmarked for loan disbursement. Micro, Small, and Medium Enterprises Principal Secretary Susan Mang’eni noted last year that by September 2024, Kenyans had borrowed Sh57 billion from the fund, with defaults amounting to Sh11 billion.
Meanwhile, Cooperatives and MSMEs Cabinet Secretary Wycliffe Oparanya is pushing for an additional Sh8.4 billion to support the Financial Inclusion Fund.
He insisted that the government’s flagship credit programme remains severely underfunded in the 2025/26 budget.
Speaking before the National Assembly Departmental Committee on Trade, Industry, and Cooperatives on Monday, Oparanya stressed that the MSMEs State Department requires Sh25.99 billion in the upcoming fiscal year starting in June. However, only Sh6.35 billion has been allocated—Sh1.72 billion for recurrent expenses and Sh4.63 billion for development—leaving a funding gap of Sh19.64 billion.
“The Financial Inclusion Fund (Hustler Fund) requires an additional Sh8 billion for credit disbursement and Sh400 million for recurrent,” Oparanya said.
He revealed that MSMEs received Sh62 billion in loans through the Hustler Fund in the 2024/25 financial year, demonstrating its critical role in empowering small businesses.
Beyond the Hustler Fund, Oparanya is also appealing for more funding for the Uwezo Fund, which supports women, youth, and persons with disabilities, as well as the Micro and Small Enterprises Authority, which fosters small business development.
For the Uwezo Fund, he noted that Sh168.6 million is needed for Constituency Uwezo Fund Management Committees, while Sh450 million is required for fund re-engineering. Additionally, he called for an extra Sh542.6 million for the Micro and Small Enterprises Authority, with Sh112 million earmarked for salaries and Sh430 million for rent, board expenses, and administrative costs.
He also flagged a Sh450 million shortfall for equipping and operationalising Constituency Industrial Centres (CIDCs), Centres of Excellence, and cold storage facilities.
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