The government is developing a system to track Kenyans who have defaulted on loans from the Hustler Fund, amid concerns over rising defaults, with more than half of the loans already disbursed falling into bad debt.
The State Department for Micro, Small and Medium Enterprises (MSMEs) has revealed that Hustler Fund borrowers who have since disappeared owe a total of Sh6 billion in unpaid loans.
MSMEs Principal Secretary Susan Auma Mang’eni, appearing before the National Assembly’s Committee on Trade, Industry and Cooperatives, said the amount was borrowed by approximately 10 million Kenyans.
“About 10 million Kenyans borrowed about Sh500 (each) in November and end of December 2022 and never repaid. We are tracing them." she said.
She explained that of the 25.8 million Kenyans enrolled in the Hustler Fund, nine million are good borrowers who have consistently repaid their loans since the fund’s inception in 2022.
The fund initially allowed individuals to borrow up to Sh50,000 for 14 days at an annual interest rate of eight per cent. The terms have since improved for loyal and repeat borrowers.
In May, Co-operatives Cs Wycliffe Oparanya revealed a system is being developed to track Hustler Fund defaulters. Oparanya, told the Senate plenary that the system will help recover unpaid loans and ensure the fund benefits more people.
He also revealed that the government is conducting an impact assessment of the fund, which was launched in 2022.
“This is a very important initiative. It’s a joint venture between the Government of Kenya and the World Bank involving Sh33 billion. Already, sensitisation programmes are underway,” Oparanya said.
He urged borrowers to repay their loans, pointing out that many misunderstood the fund as a handout from the government.
“I urge Kenyans who borrowed this money to repay it. This initiative is well-intentioned and meant to benefit many,” the CS said.
Oparanya noted that the Hustler Fund, launched shortly after the 2022 elections, was wrongly interpreted by some as a reward, leading to high default rates.
“Unfortunately, when such programmes are introduced after elections, many people assume they are being rewarded. That has contributed to the high number of defaulters,” he said.
The CS added that the tracking system under development will support recovery efforts and help maintain the fund’s sustainability.
The high default rate however, has not deterred government from financial drives. Over 800,000 youths will benefit from a Sh20 billion government initiative, launched in partnership with the World Bank, to enhance employability through skills training, business support and job experience.
President William Ruto recently unveiled the National Youth Opportunity Towards Advancement (NYOTA) Project, which is aimed at unlocking the potential of young people by equipping them with relevant skills and linking them to opportunities for self-reliance.
Ruto revealed that the initiative targets over 800,000 youth aged 18 to 29 years, and up to 35 years for those with disabilities.
According to Ruto, the NYOTA Project leverages the Hustler Fund platform, which he said has already attracted over one million applicants for its business support component.
“It seeks to improve employability through skills training, on-the-job experience, recognition of prior learning, entrepreneurial development, and the promotion of a savings culture,” he said.
Ruto emphasised that it aims to support at least 70 youths per ward across the country by providing grant funding, business training, and market linkages. He said the government has committed Sh5 billion in grants to assist 100,000 young people, each receiving Sh50,000 in seed capital to start their entrepreneurial ventures by August this year.
The Hustler Fund, Ruto said, has supported over 25 million borrowers, disbursed Sh70 billion, and mobilised Sh4.5 billion in savings. He said the Fund has introduced a revolutionary credit rating system that is transforming access to finance for millions previously excluded from the formal financial system.
"The Hustler Fund credit rating system is designed to offer a fair and transparent assessment of creditworthiness. It serves as an alternative form of soft collateral for individuals at the base of our economy, the historically excluded majority who lack access to formal financial guarantees such as payslips, title deeds, or other traditional forms of collateral," Ruto said.
He added that over 4.5 million beneficiaries with strong credit scores have qualified for increased loan limits. Additionally, 400,000 of them are now eligible for loans of up to Sh150,000 without any other collateral except their credit score.
