KHRC calls for immediate abolition of Hustler Fund citing high default rate and poor design

The Kenya Human Rights Commission (KHRC) has called for the immediate abolition of the Hustler Fund, describing it as economically unsustainable and a failure in its mission to empower low-income Kenyans.

In a damning report titled "Failing the Hustlers", released on Monday, KHRC criticised the fund's design, citing poorly structured loan products, unrealistic repayment terms, widespread defaults, and a lack of transparency.

Launched on November 30, 2022, with an initial allocation of Sh50 billion, the Hustler Fund is one of the flagship programmes of the Kenya Kwanza administration’s bottom-up economic transformation agenda.

It provides personal and enterprise loans via mobile platforms run by Safaricom, Airtel, and Telkom, with disbursement handled by KCB and Family Bank.

Promises not delivered

Despite lending over Sh36 billion to more than 21 million borrowers, KHRC argues that the fund has not delivered on its promises. The report highlights a default rate of 68.3 per cent, suggesting that nearly Sh340 of every Sh500 lent may never be recovered.

KHRC further estimates that the net cost to taxpayers stands at 71.5 per cent, once operational and borrowing costs are taken into account.

Borrowers are expected to repay loans within 14 days. Failure to do so results in higher interest rates, credit score penalties, and eventual suspension of accounts.

According to the commission, this model traps vulnerable borrowers in a cycle of debt rather than enabling economic progress.

Additionally, the fund deducts mandatory savings from each loan disbursement—an approach many beneficiaries describe as confusing and counterproductive.

"If the government is truly genuine about empowering Kenyans at the bottom of the pyramid, it must go beyond populist headlines. Otherwise, the Hustler Fund is quickly proving to be another politically convenient but economically unsustainable initiative," the report reads.

The Commission also raised concerns about opaque governance, the absence of disaggregated data, and oversight issues previously flagged by the Auditor General.

KHRC argues that mere reforms will not fix the fund’s fundamental structural, legal, and political flaws.

As such, it has urged Parliament and the Executive to scrap the programme and redirect the remaining funds to better-established financial inclusion schemes such as the Women Enterprise Fund (WEF).

"Parliament and the Executive must decommission the Hustler Fund. The remaining resources should be reallocated to existing, better-structured financial inclusion initiatives with proven performance," the report reads.

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• Bottom-Up Economic Transformation Agenda
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• KHRC calls for immediate abolition of Hustler Fund citing high default rate and poor design
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"Channelling resources into the WEF, YEDF, and Uwezo Fund and integrating lessons from the Hustler Fund's failure would provide value for taxpayers. Even with this reallocation, safeguards must be implemented to prevent political capture, duplication of roles, and misuse of funds."

In addition, KHRC has called for mandatory financial literacy training, performance-based lending, and enhanced transparency in all future public credit schemes. It warns that the current approach undermines constitutional principles on prudent public finance management and inclusive development.

"There should be phased loan limits tied to demonstrated business growth and repayment capacity so that taxpayers' money is not lost through default," says the report.

"There must be regular publication of disaggregated data (by gender, age, region, loan purpose, repayment) for all financial inclusion funds. The enforcement of procurement, auditing, and disclosure standards across all financial inclusion schemes must also be stringent."