Hustler, Uwezo, and other funds struggle with billions in unpaid loans
The Commodities Fund recorded the highest loan defaults, writing off Sh12.36 billion in loans extended to sugar companies.
Taxpayers face a potential loss of Sh28.4 billion due to loan defaults across five public funds, including the Hustler Fund, Uwezo Fund, Commodities Fund, Women Enterprise Fund, and Youth Enterprise Development Fund, an audit has revealed.
The audit for the financial year ending June 2024 highlights growing concerns over the sustainability of these funds, which were established to support youth, women, and persons with disabilities (PWDs).
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It reveals that weak credit policies and poor loan recovery systems have worsened the situation, threatening the viability of the initiatives.
The Commodities Fund recorded the highest loan defaults, writing off Sh12.36 billion in loans extended to sugar companies.
“While due process was followed through approvals from Parliament and the National Treasury through a letter dated March 27, 2024, these substantial loans write-off raises significant financial implications for the fund,” the audit states.
It further notes that the write-off weakens the agency’s ability to issue new loans, impacting farmers reliant on the fund.
In addition, the Commodities Fund increased its loan loss provisions by Sh61.4 million, bringing the total to Sh7.8 billion, raising fears that more loans might be unrecoverable.
Farmers' credit
Established under the Crops Act, 2013, the fund was meant to provide affordable credit to farmers for farm improvements, inputs, and price stabilization.
The audit attributes the rising defaults to inadequate borrower screening, poor loan monitoring, and inefficient recovery mechanisms.
“This increase highlights significant weaknesses in the Fund’s credit risk management practices, such as inadequate borrower vetting, a lack of effective monitoring of loan performance, and inefficient loan recovery systems,” the report notes.
At the Hustler Fund, which was launched two years ago, Sh13.57 billion in loans remained unpaid as of June 2024, with Sh8.7 billion defaulted for over a year.
“However, records provided indicated that approximately Sh8,737,216,077 or 64 per cent of the Fund’s total loans receivables as of June 30, 2024, were outstanding for more than one year hence casting doubt if the Fund will recover the loans issued to borrowers,” the audit notes.
The government had injected Sh12.8 billion into the Hustler Fund by June 2024, while private lenders had also used the platform to provide loans.
However, the audit flagged duplicate loans amounting to Sh1.6 billion, raising further concerns about the fund’s management.
At the Uwezo Fund, which disbursed over Sh500 million in loans in the year ending June 2024, Sh5.17 billion remains unpaid, adding to the growing list of defaults that continue to undermine the effectiveness of these financial programmes.
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