NAIROBI, Kenya – The State Department for Micro, Small and Medium Enterprises (MSMEs) is staring at a potential Sh6 billion loss as millions of Hustler Fund borrowers have defaulted and vanished, raising fresh concerns about the sustainability and oversight of one of President William Ruto’s flagship financial inclusion programs.
Appearing before the National Assembly’s Committee on Trade, Industry and Cooperatives on Tuesday, MSMEs Principal Secretary Susan Mang’eni revealed that nearly 10 million Kenyans borrowed an average of Sh500 each between November and December 2022 and have since failed to repay.
“We are tracing them, and if recovery efforts fail, we may be forced to write off about Sh6 billion,” Mang’eni told MPs. “However, we are not at that stage yet—we are still pursuing the defaulters.”
Mang’eni’s remarks come amid growing scrutiny over the fund’s viability.
Despite the ballooning defaults, the government is now seeking an additional Sh5 billion to sustain the Hustler Fund’s operations—an ask that drew sharp rebuke from lawmakers.
MPs Demand Accountability
Members of the committee grilled the PS over the fund’s management, questioning the logic of injecting more taxpayer money into a scheme already struggling to recover past disbursements.
“Why should we allocate you an additional Sh5 billion when Sh6 billion has already vanished?” asked committee vice chairperson Maryanne Keitany. “People in my constituency think the Sh500 they borrowed was a thank-you gift from the government they voted for.”
Committee chair Bernard Shinali pressed for an explanation on how a revolving fund worth Sh65.5 billion could suffer such a massive shortfall in recoveries.
Other MPs, including Kajiado South’s Samuel Parashina and Machakos Woman Representative Joyce Kemene, echoed concerns about accountability and suggested that the ministry consider alternative uses for the fund.
“There is a lot of conmanship and theft in the Hustler Fund. We can’t continue pouring money into it,” Parashina said.
Billions Disbursed, Billions at Risk
Since its launch in 2022, the Hustler Fund has disbursed Sh65.7 billion to more than 25 million Kenyans.
Mang’eni said Sh53.2 billion had been repaid, with 9 million users classified as good borrowers who consistently service their loans.
Initially, the fund allowed individuals to borrow up to Sh50,000 at an annual interest rate of eight percent.
Those who build a positive credit history over time are now eligible for higher limits and better terms.
Despite this progress, the fund faces a credibility challenge, particularly after an Auditor General’s report flagged irregularities, including disbursements to minors—some reportedly as young as 10 days old.
New Products, Bigger Budget
Defending the ministry’s 2025/26 budget, Mang’eni said the Hustler Fund, also known as the Financial Inclusion Fund, had been allocated just Sh1 billion in the latest Budget Policy Statement—well below the Sh5 billion requested.
She emphasized the fund’s role in financial inclusion and outlined new products in development, including insurance premium financing for the upcoming Social Health Authority (SHA) and a housing credit scheme in partnership with the State Department for Housing.
“We’re developing innovative financial solutions for the unserved and underserved, and that requires capital,” Mang’eni told the committee. “We humbly request for an additional Sh4 billion to meet this demand.”
The State Department for MSMEs has been allocated Sh5.59 billion for the next financial year, of which Sh1.83 billion is for recurrent expenditure and Sh3.76 billion earmarked for development.
