No evidence to support Sh6 billion Hustler Fund write-off, Auditor General tells MPs

President William Ruto registering for the Hustler Fund on November 30, 2022. (Photo: PCS)

By Lucy Mumbi
Saturday, June 7, 2025

Auditor General Nancy Gathungu told MPs that there was no proof the borrowers were untraceable or incapable of repayment, raising concerns about transparency in the fund’s management.

The government has been warned against writing off more than Sh6 billion in Hustler Fund loan defaults without providing clear evidence that the money is unrecoverable.

Auditor General Nancy Gathungu told Members of Parliament that there was no proof the borrowers were untraceable or incapable of repayment, raising concerns about transparency in the fund’s management.

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“If you are claiming that Sh6 billion has not been accounted for, various questions emerge. Do you have the list of the individuals and the amount advanced to them? Are you able to prove that the individuals are untraceable or unable to pay, and therefore, the amount is unrecoverable? I think that is where we should start,” Gathungu told the Budget and Appropriations Committee (BAC), chaired by Alego Usonga MP Samuel Atandi.

The Hustler Fund was launched in November 2022 as one of President William Ruto’s flagship programmes, aimed at offering affordable credit, savings, insurance, and investment services to unserved and underserved Kenyans.

Targeted beneficiaries include youth, women, and individuals at the bottom of the economic pyramid. Under the fund, loans ranging between Sh500 and Sh50,000 are disbursed through mobile phones for a period of 14 days at an interest rate of eight per cent per annum. Of the loan amount, five per cent is withheld as mandatory savings, 70 per cent for long-term and the remaining 30 per cent for short-term savings.

Despite the fund’s ambitious goals, the government is struggling to recover billions of shillings lent out in the early stages of the programme.

Principal Secretary, State Department for Micro, Small and Medium Enterprises (MSME) Development, Susan Mang’eni, recently told the Trade, Industry and Cooperatives Committee that between Sh5 billion and Sh6.3 billion could be lost following mass defaults by nearly 10 million borrowers.

“About 10 million Kenyans borrowed about Sh500 each in November 2022 and end of December 2022 and never repaid. We are tracing them, and if we cannot recover the money, we will be considering a write-off of about Sh6 billion for individuals who borrowed and vanished. But we are not at the write-off stage at this moment because we are pursuing defaulters,” Mang’eni told the MPs.

The PS made the remarks while defending her department’s budget for the 2025/26 fiscal year. She noted that although 25.8 million customers are registered on the Hustler Fund platform, only 9 million are considered good borrowers who have repaid their loans consistently since the programme’s inception.

“The Financial Inclusion Fund (Hustler Fund) requires Sh5 billion but was only allocated Sh1 billion,” she said in her submissions to the committee.

Even as the government struggles with the massive defaults, the State Department for MSME Development has made a fresh request for an additional Sh5 billion for the fund in the upcoming financial year. This is despite the National Treasury halving an earlier Sh2 billion proposal contained in the 2025 Budget Policy Statement adopted by Parliament in February.

Baringo County Woman Representative Florence Jematiah criticised the move to pump more money into the fund without first addressing the loan recovery failures.

“Kenyans were lent money but have since defaulted, and here we are, we want to allocate more money,” she said.

The Trade, Industry and Cooperatives Committee, chaired by Ikolomani MP Bernard Shinali, told the BAC that it had resolved to retain the budget estimates at Sh1 billion instead of increasing the allocation.

“We made the decision because of their failure to recover the Sh6 billion in loan amounts to the Hustlers. They should recover the amount first before seeking more,” Shinali said.