The government is contemplating writing off Sh6 billion loans taken by Kenyans from the Hustler Fund after it emerged that borrowers have since ‘disappeared’. 

Micro Small and Medium Enterprises (MSME) Development Principal Secretary Susan Mang’eni told MPs that the individuals borrowed the funds either once or twice in November and December 2022, when the fund was launched. 

She, however, said out of the Sh65.5 billion loans taken, about Sh53.8 billion had been repaid, with the remaining either being defaulted on or borrowers increasing the repayment period. 

She said: “The repayment rate of personal loans is 80 per cent. But we had about 10 million Kenyans who borrowed as low as Sh500 either once or twice at the beginning of 2022, and they did not pay. The money at risk is about Sh6 billion.” 

She added: “These people who have not paid have scored grade C3 and have hence been graded as bad borrowers and are not eligible to take loans at the moment.” 

The move comes barely days after Auditor General Nancy Gathungu revealed that the Fund is riddled with financial improprieties. 

In her 2023/2024 financial year audit report, she revealed that the Fund has non-performing loans amounting to Sh8 billion that could be written off, as they have not been serviced for the last year, with 64 per cent of the money borrowed not being repaid. 

Blacklisting borrowers 

Mang’eni who appeared before the Departmental Committee on Trade, Industry and Cooperative chaired by Ikolomani MP however said at the moment they are looking for ways to recover the said money including blacklisting the borrowers who did not pay as well as incentivising them to pay.” 

Part of the incentives they want to provide is to provide an insurance premium product on the Hustler Fund platform to accord opportunity to the beneficiaries to borrow for annualised Social Health Authority (SHA) premiums, as well as creation of a product for affordable housing programmes to unlock home ownership and opportunity. 

She disclosed that more than 4.9 million Kenyans have undergone means testing and are eligible for insurance premium financing.  

He said: “Already, we are integrating the insurance premium financing product on the Hustler Fund platform to accord beneficiaries the opportunity to borrow for annualised SHA premiums within their current limits towards the realisation of access to universal healthcare. We are also in discussion with the state department for Housing towards co-creating a product for affordable housing to unlock home ownership opportunities for proven Hustler Fund good borrowers”. 

Mang’eni, however, said that the Fund still requires an additional Sh5 billion to actualise the said projects, yet they were only allocated Sh1 billion in the 2025/2026 budget. 

On the recurrent budget, she said the fund requires an additional Sh400 million, out of which Sh100 million is for personal emoluments for the approved recruitment of the staff establishment, while Sh300 million is towards the acquisition of a financial inclusion system to enhance lending and loan recovery. 

She said: “We note the exposure of the Fund from audit queries, which borders on data reconciliation. Having our own system in place will enable real-time data management and reporting to reduce the level of risks from such avoidable exposure.” 

And added: “Hon chairperson, we therefore humbly request for reinstatement of our budgetary requirement of Sh5 billion to enable us to meet the increasing demand for innovative financial products. We therefore request the additional funding of Sh4 billion.” 

Additional funding 

But committee members sought to know why the state department requires additional funding, yet they can collect Sh6 billion from defaulters. 

Said Aldai MP Marriane Keitany: “If she has Sh6 billion that is unrecovered and a Sh65 billion revolving fund, why does she want us to give her additional funds?” 

Machakos Woman Representative Joyce Kamene demanded to know the formulae the fund uses to distribute funds to groups, as none of the groups from her county have benefited. 

Starehe MP Amos Mwago said there is a need for the fund to be re-examined as repayment of loans is only 36 per cent, which shows that it cannot be self-sustaining.