The government has allocated an extra Sh300 million to the Hustler Fund in the 2025/26 Budget, even as it struggles to recover an estimated Sh6 billion lost to defaulters.

Treasury Cabinet Secretary John Mbadi made the announcement on Thursday during the budget presentation, saying the aim is to improve access to credit for low-income earners and small businesses.

This comes despite concerns raised over the fund’s sustainability, with millions of borrowers yet to repay their loans.

"The government recognises the challenge of accessing affordable credit by most Micro, Small and Medium Enterprises (MSMEs) and Kenyans at the bottom of the pyramid. To address this challenge, the government is enhancing access to finance by increasing support for key interventions," Mbadi said.

The additional allocation pushes the government's continued investment in the Financial Inclusion Fund, which was introduced to support households and small businesses with affordable digital loans.

Since its launch in 2022, the Hustler Fund has attracted 25.8 million registered users, but only nine million are considered reliable borrowers.

Appearing before the National Assembly’s Committee on Trade, Industry and Cooperatives, MSMEs Principal Secretary Susan Auma Mang’eni revealed that 10 million people borrowed around Sh500 each between November and December 2022 and never repaid.

"About 10 million Kenyans borrowed about Sh500 (each) in November and end of 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," Mang’eni said.

"But we are not at the write-off stage at this moment because we are pursuing defaulters."

The Hustler Fund initially allowed individuals to borrow up to Sh50,000 for a two-week period, charged at an annual interest rate of 8%.

Borrowers who repay on time have been rewarded with improved loan terms, including increased limits and longer repayment windows.

In the 2025/26 Budget, other credit support initiatives also received funding.

The Youth Enterprise Development Fund was allocated Sh300 million, while the Centre for Entrepreneurship Project will receive Sh600 million.

The Rural Kenya Financial Inclusion Facility has been allocated Sh1.3 billion, and Sh200 million has been set aside for MSME Agricultural Credit.

In comparison, the 2024/25 financial year had allocated Sh5 billion to the Hustler Fund, alongside Sh200 million for the Youth Enterprise Development Fund, Sh162.5 million for the Centre for Entrepreneurship Project and Sh1.9 billion for the Rural Kenya Financial Inclusion Facility.

The state has also committed to supporting livestock farming to strengthen the MSME value chain, especially in rural areas.