Ms Susan Mang'eni, the Principal Secretary in the State Department of Micro, Small and Medium Enterprises Development, in Nairobi on July 9, 2024.
The government wants MPs to approve an additional Sh5 billion to finance the Hustler Fund, even though it has emerged that Sh6 billion has not been repaid by borrowers who have since disappeared.
The State Department for Micro, Small and Medium Enterprises (MSMEs) informed the National Assembly's Committee on Trade, Industry and Cooperatives that it could seek a write-off of the Sh6 billion if ongoing recovery efforts prove unsuccessful.
Susan Mang’eni, Principal Secretary for MSMEs, told the MPs that the fund risks losing between Sh5 billion and Sh6.3 billion after nearly 10 million Kenyans defaulted.
“About 10 million Kenyans borrowed about Sh500 in November and end of December 2022 and never repaid,” Ms Mang’eni said.
“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.”
She said that 9 million of the 25.8 million Kenyans enrolled in the Hustler Fund are good borrowers who have accessed mobile money loans since its inception in 2022.
The Hustler Fund is one of President William Ruto’s flagship projects and is intended to enable Kenyans at the bottom of the economic pyramid, including young people and women, to access financial services such as credit, savings, insurance and investment products.
When it was launched, the Hustler Fund allowed individuals to borrow a maximum of Sh50,000 for 14 days at an interest rate of eight percent per year.
These rates have since been increased for good and repeat borrowers.
Appearing before the committee chaired by Ikolomani MP Bernard Shinali to defend the State Department's budget for the 2025/26 financial year, Ms Mang’eni said that the budget for the Financial Inclusion Fund, also known as the Hustler Fund, had been reduced from Sh2 billion to Sh1 billion, as set out in the Budget Policy Statement (BPS).
“The Financial Inclusion Fund (Hustler Fund) requires Sh5 billion but was only allocated Sh1 billion,” Ms Mang’eni said in submissions to the committee on Tuesday evening.
“The experience of the Fund so far has demonstrated a rich database of 25 million Kenyan beneficiaries with increasing and differential financial inclusion needs, which requires that we keep innovating, developing and deploying bottom of the pyramid financial services and products that are affordable, accessible and appropriate for the unserved and under-served persons, including credit, saving, insurance premiums, and investment products.”
However, the revelation that Sh6 billion of the Hustler Fund has not been repaid by borrowers as rattled the committee, which has questioned the rationale behind the State Department's request for an additional Sh5 billion from taxpayers.
“Why should we allocate you additional Sh5 billion from taxpayers when people have run away with billions of shillings from the Hustler Fund?” asked Ms Maryanne Keitany, the committee vice chairperson.
“If Sh6 billion is unrecoverable, why should we add you another Sh5 billion? People in my constituency told me that the Sh500 or more that they borrowed was a 'thank you gift' from the government they voted for and that they will not refund the lunch.”
Mr Shinali demanded that the PS provide the committee with a proper justification for why the Hustler Fund, which has a revolving fund of Sh65.5 billion, has failed to recover the Sh6 billion it lent.
Kajiado South MP Samuel Parashina and Machakos Women Representative Joyce Kemene questioned the ministry's request for additional funding.
“If people have borrowed and vanished, who will refund the lost public money? We have never been satisfied as lawmakers with the Hustler Fund,” Mr Parashina said.
“Take the Hustler Fund to finance your other projects like Kenya Jobs Economic Transformation (KJET) and National Youth Opportunities Towards Advancement (NYOTA) because there is a lot of conman-ship and theft in the Hustler Fund and we can’t continue funding it.”
While defending the request for additional funding of Sh5 billion, Ms Mang’eni told MPs that the State Department had lent out Sh65.7 billion, of which Sh53.2 billion had been repaid.
She said that the ministry is integrating an insurance premium financing product into the Hustler Fund platform, which will enable beneficiaries to borrow towards annual Social Health Authority (SHA) premiums within their current limits, with the aim of achieving universal health care access.
Ms Mang’eni said that more than 4.9 million Kenyans had undergone means testing and were eligible for insurance premium financing.
“This expanded need will require enhanced capital to meet the new demand for credit as we roll out,” Ms Mang’eni said.
“We are also in discussions with the State Department for Housing towards co-creating a product for affordable housing to unlock home ownership opportunities for proven Hustler Fund good borrowers.”
Ms Mang’eni said that the State Department had already incorporated the NYOTA project into the Hustler Fund platform, making it a one-stop shop for socio-economic empowerment and a means of stimulating economic participation at the bottom of the economic pyramid.
“We therefore humbly request for reinstatement of our budgetary requirement of Sh5 billion to enable us meet the increasing demand for innovative financial products. We therefore request for the additional funding of Sh4 billion,” Ms Mang’eni said.
The Treasury has allocated the State Department Sh5.59 billion out of which Sh1.83 billion is for recurrent expenditure and Sh3.76 billion has been earmarked for development in the financial year 2025/26.
