NAIROBI, Kenya – The government has come under scrutiny over a proposal to write off more than Sh6 billion in defaulted Hustler Fund loans, with Auditor General Nancy Gathungu warning against the move without clear evidence that the money is unrecoverable.
Appearing before the National Assembly’s Budget and Appropriations Committee (BAC) on Thursday, Gathungu challenged officials to provide a verifiable list of defaulters, arguing that the State must first prove that borrowers are untraceable or incapable of repaying the loans.
“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?” Gathungu posed.
The Hustler Fund, one of President William Ruto’s signature initiatives launched in November 2022, was designed to offer low-interest credit, savings, and investment options to underserved Kenyans, especially youth, women, and informal sector workers.
But nearly two years later, the programme faces a ballooning default rate — with government data showing that up to 10 million borrowers may have disappeared with loans taken out during the fund’s launch phase.
Appearing before the Trade, Industry and Cooperatives Committee earlier this week, Principal Secretary for MSME Development Susan Mang’eni revealed that defaulters took out loans averaging Sh500 between November and 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,” Mang’eni told MPs while defending her department’s 2025/26 budget.
Despite registering over 25 million customers on the Hustler Fund platform, only nine million are considered good borrowers who have consistently repaid their loans, according to the PS.
The State Department for MSME Development is now seeking an additional Sh5 billion allocation for the Hustler Fund in the upcoming financial year — a move that has sparked resistance in Parliament.
Baringo Woman Representative Florence Jematiah questioned the rationale of pumping more money into the scheme without fixing its 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, has recommended retaining the allocation at Sh1 billion — far short of the department’s request — citing poor performance.
“They should recover the amount first before seeking more,” said Shinali.
The Hustler Fund disburses loans ranging from Sh500 to Sh50,000 at an interest rate of 8% per annum, with a portion of the loan withheld for mandatory savings.
But despite its initial popularity, the programme is now grappling with credibility concerns amid ballooning defaults and weak oversight.
The National Treasury had already halved the fund’s initial allocation in the 2025 Budget Policy Statement to Sh1 billion.
