NAIROBI, Kenya – Kenyans who have defaulted on their Hustler Fund loans could soon face government action, as authorities move to tighten recovery efforts.
The fund, which was introduced to provide affordable credit to small business owners and individuals, now has outstanding loans amounting to Sh11.4 billion as of March.
With a default rate surpassing 20 percent, the government is adopting stricter measures akin to those used by digital lenders to compel defaulters to repay.
This includes increased pressure through direct messaging and potential fines for those who have failed to service their loans for more than a year.
The non-performing loans under the Hustler Fund now exceed the average default levels in Kenya’s banking sector.
Data from the Central Bank of Kenya (CBK) shows that as of April, the gross non-performing loans ratio in commercial banks stood at 16.1 percent, up from 15.1 percent in February.
Loan Recovery Struggles
The latest financial report from Safaricom, which facilitates the fund’s mobile disbursement through M-Pesa, indicates that Sh49.5 billion has been issued in loans since the initiative was launched in November 2022.
However, only 77 percent of the amount has been repaid, leaving a significant funding gap.
Despite the fund’s affordability—offering loans at an annual interest rate of eight percent, which is lower than market rates—recovery remains a challenge.
Borrowers who default not only face daily penalty charges but may also soon experience intensified debt collection efforts.
Ruto’s Vision vs. Reality
The Hustler Fund was a key campaign promise by President William Ruto aimed at empowering small business owners, protecting borrowers from predatory lenders, and fostering a savings culture.
The initiative, which is projected to provide up to Sh50 billion annually, was expected to benefit over 15 million Kenyans in the long run.
However, recent trends indicate a slowdown in disbursements, with the government struggling to recover outstanding amounts.
Concerns have also been raised about the fund’s accessibility, as reports suggest that wealthier Kenyans have been taking advantage of the loans more than the lower-income groups they were meant to support.
