The government is preparing to take a more aggressive approach to recover Ksh7 billion in unpaid loans from the Hustler Fund, targeting M-Pesa accounts and airtime of defaulters. This follows a surge in defaults from 13 million Kenyans who have borrowed from the fund but failed to repay.
Elizabeth Nkukuu, the acting CEO of the Financial Inclusion Fund (Hustler Fund), informed MPs that recovery efforts have hit a wall, with most defaulters having taken loans within the first two months of the fund’s launch. Nkukuu stated that the government is exploring legal avenues to deduct funds directly from defaulters’ M-Pesa accounts and airtime purchases. She indicated that the defaulters are not financially strained but are intentionally avoiding repayment, noting that many of them transact an average of Ksh21,000 monthly.
Despite continuous reminders to repay, the recovery efforts have not been successful. In addition, concerns were raised by MPs over the lack of insurance for the disbursed billions. Lawmakers, including Kabuchai MP Majimbo Kalasinga and North Imenti MP Rahim Dawood, questioned how the fund could operate without insurance and suggested it might need to be shut down to avoid further loss of taxpayer money. Nkukuu admitted that the funds were not insured, which is why forceful recovery is now being considered.
Furthermore, an audit by the Auditor General revealed that over 1,300 people who were not registered for the Hustler Fund had received loans, and some loan identities had been duplicated, raising concerns over the fund’s management and the potential misuse of public resources.
Launched by President William Ruto on November 30, 2022, with Ksh12 billion in seed capital, the Hustler Fund aims to provide financial inclusion to those at the lower end of the economic spectrum. However, the lack of effective recovery mechanisms and operational challenges are casting doubt on its sustainability.
