Gov't defends hustler fund amid Sh6bn loan write-off plan

The government plans to write off Sh6 billion in unpaid Hustler Fund loans as it seeks an additional Sh5 billion to keep the programme running, raising fresh questions about the sustainability of President William Ruto’s flagship project.

Micro, Small and Medium Enterprises Development Principal Secretary Susan Mang’eni told the National Assembly’s Committee on Trade, Industry and Cooperatives that 10 million Kenyans who took loans from the fund since 2022 have not paid back.

"They never repaid, and that is what we will be seeking to write off, so the portfolio that is totally at risk and is in default is about between Sh5 billion and Sh6 billion,"  Mang’eni said.

Despite the high number of defaulters, Mang’eni defended the fund, saying that 9 million borrowers are still active and have continued to repay. So far, Sh65.7 billion has been disbursed, with Sh53.2 billion repaid.

The PS said that out of the active users, many have gradually increased their borrowing limits through consistent repayment.

She urged lawmakers to support the ministry’s request for Sh5 billion in the next financial year to meet growing demand and help those ready to graduate to higher loan brackets.

"Those who are doing better, we need to enhance their limit. And the moment you enhance someone's limit from Sh500 to Sh10,000, you have to fund, and that is why we are asking for additional funding to fund the 4.5 million who will be graduating to the bridge and at the same time take care of the new applicants who are onboarding Hustler Fund every day," she said.

However, lawmakers expressed concern over the fund’s performance, warning that it could place further strain on public finances.

"At this rate, I think you're going to dive into something else. We cannot afford to be writing Sh6 billion for you," said Starehe MP Amos Mwago.

Mang’eni revealed that the ministry is considering legal changes to allow for forceful recovery of unpaid loans and to safeguard the fund for future borrowers.

The Hustler Fund, launched with the promise of empowering small businesses through quick, affordable loans, attracted over 25 million Kenyans in two years.

But with nearly half of them defaulting, pressure is mounting on the government to explain how it intends to balance the need for financial support with accountability.