The Ministry of Cooperatives has denied allegations that it embezzled Sh8 billion from the Financial Inclusion Fund, also known as the Hustler Fund.

Cooperatives Principal Secretary Susan Mang'eni responded to claims made by the Auditor General Nancy Gathungu, who reported that the ministry could not account for Sh8.2 billion from the Fund’s approved budget of Sh20.2 billion.

Mang'eni explained that the Sh8 billion was set aside as counterpart funding to match the savings of Hustler Fund beneficiaries and was never drawn down from the National Treasury.

"The initial capitalisation of the Fund was Sh20.2 billion, with Sh12 billion allocated towards lending and Sh8 billion as counterpart funding to match the pension savings for the Hustler Fund beneficiaries," she said.

"Contrary to reports appearing in some media, the Sh8 billion in question, which had been allocated as counterpart funding to match the long-term savings of the Hustler Fund, was not drawn down from the National Treasury."

Mang’eni spoke as the Auditor General’s report revealed that out of the Sh22.96 billion allocated to the Hustler Fund in the 2022/2023 budget, only Sh12 billion was spent.

Appearing before the National Assembly’s Public Accounts Committee on Wednesday, Cooperatives Principal Secretary Patrick Kilemi admitted that while Sh20 billion had been allocated to the Hustler Fund, only Sh12 billion was requested and transferred.

“No request was made for the remaining Sh8 billion, hence the under-absorption,” Kilemi said.

He attributed the confusion to transition issues, explaining that the State Department for MSMEs had not yet been fully integrated, forcing the Cooperatives Department to temporarily manage the fund.

“I was tasked to initiate the process of the Hustler Fund as the State Department for MSMEs was getting established,” he said.

But MPs on the committee, chaired by Butere MP Tindi Mwale, faulted Kilemi for failing to account for the Sh8 billion.

“You cannot pass the buck by saying the officer failed to submit a request,” Mwale said, warning that the responsibility rested with the principal secretary.

Other lawmakers, including Funyula MP Wilberforce Oundo and Aldai MP Marianne Kitany, also accused Kilemi of negligence.

To clear the matter, Mang'eni promised to provide the Public Accounts Committee with all the necessary documents to prove that the money was not misused.

She also shared progress made by the Fund, noting that Sh71 billion had been disbursed as personal and group loans to over 26 million people. The Fund has mobilised close to Sh4.8 billion in savings, both voluntary and mandatory.

"Already, over 4.5 million beneficiaries out of the 9 million repeat customers are scoring within A and B grades, demonstrating good creditworthiness," she said.

Mang'eni added that repeat customers have the chance to build banking relationships, helping them access credit from mainstream financial institutions for business growth.

She assured the public that the Fund remains focused on its goal to deepen financial and credit inclusion among vulnerable groups in the economy.