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Post Reply: Hustler Fund Officials Deny Misuse Allegations as Auditor General Flags Sh8 Billion Shortfall

<blockquote><div class="quotetitle">Quote from <a class="profile-link highlight-moderator" href="https://lawguide.co.ke/understanding-law/legal-forum/profile/lawyer/">Lawyer</a> on June 20, 2025, 11:01 am</div><div id="pl-6520"  class="panel-layout" ><div id="pg-6520-0"  class="panel-grid panel-no-style" ><div id="pgc-6520-0-0"  class="panel-grid-cell"  data-weight="1" ><div id="panel-6520-0-0-0" class="so-panel widget widget_sow-editor panel-first-child panel-last-child" data-index="0" data-style="{&quot;background_image_attachment&quot;:false,&quot;background_display&quot;:&quot;tile&quot;,&quot;background_image_size&quot;:&quot;full&quot;,&quot;background_image_opacity&quot;:&quot;100&quot;,&quot;border_thickness&quot;:&quot;1px&quot;}" ><div
			
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	<p dir="ltr" data-pm-slice="0 0 []">The Hustler Fund, a flagship initiative of President William Ruto’s administration aimed at providing affordable credit to low-income Kenyans, is under scrutiny following a damning report by Auditor General Nancy Gathungu. The report, presented to Parliament on June 17, 2025, revealed that the State Department for Cooperatives Development cannot account for approximately Sh8 billion of the Fund’s approved budget for the 2022/23 financial year, raising concerns about transparency and financial management. However, officials from the Ministry of Cooperatives have vehemently denied allegations of misuse, asserting that the funds are intact and properly allocated.</p>
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<p dir="ltr">According to Auditor General Nancy Gathungu’s 2023/2024 financial year audit report, the Hustler Fund faces significant financial irregularities, with non-performing loans amounting to approximately Sh8 billion. The report highlights that 64% of the loans disbursed have not been repaid for over a year, casting doubt on the Fund’s sustainability and recovery mechanisms. Gathungu further noted that the Sh8 billion in question was part of a Sh20.2 billion approved budget, of which only Sh12 billion was spent on lending, leaving the remaining Sh8.2 billion unaccounted for.</p>
<p dir="ltr">The audit also uncovered alarming irregularities, including loans disbursed to ineligible borrowers. A separate report from February 2025 revealed that Sh31.8 million was disbursed to 44,167 underage or “unborn” borrowers, including 42,981 accounts registered with future birthdates and 1,186 children as young as 10 days old who received Sh681,395 in loans. Additionally, over 880,000 loans were issued multiple times, and Sh401 million was spent on unclear purposes, further fueling concerns about oversight and accountability.</p>
<p dir="ltr">Gathungu emphasized that there is no evidence to support claims that the borrowers of the Sh8 billion are untraceable or incapable of repayment, urging greater transparency in the Fund’s operations. “The absence of proof regarding the whereabouts of these funds raises serious questions about the management of the Hustler Fund,” she told the National Assembly’s Public Accounts Committee on June 7, 2025.</p>
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<p dir="ltr">In response, Principal Secretary for Micro, Small and Medium Enterprises Development, Susan Mang’eni, dismissed the allegations of financial misappropriation as baseless. Speaking before the National Assembly’s Public Accounts Committee on June 19, 2025, Mang’eni clarified that the Sh20.2 billion allocated to the Hustler Fund was divided into two components: Sh12 billion for lending and Sh8 billion as counterpart funding to match pension savings for beneficiaries. She assured the committee that the Sh8 billion was not misused but was set aside to support the Fund’s operational framework and savings initiatives.</p>
<p dir="ltr">Mang’eni promised to provide comprehensive documentation to substantiate the Ministry’s claims, emphasizing that the Hustler Fund has made significant strides in promoting financial inclusion. “The Fund has disbursed over Sh71 billion to more than 26 million Kenyans in personal and group loans, mobilizing close to Sh4.8 billion in savings,” she stated. She further highlighted that over 4.5 million of the Fund’s 9 million repeat customers have demonstrated strong creditworthiness, scoring within A and B grades, enabling them to access mainstream financial institutions for further credit.</p>
<p dir="ltr">The Principal Secretary also outlined plans to expand the Fund’s offerings, including integrating insurance premium financing to support universal healthcare and collaborating with the Housing State Department to create affordable housing products for borrowers with good repayment records. “We are committed to ensuring the Hustler Fund delivers on its promise to uplift low-income Kenyans,” Mang’eni affirmed.</p>
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<p dir="ltr">The Auditor General’s findings have sparked a heated debate, with some Members of Parliament questioning the government’s control over the Hustler Fund’s operations. On June 12, 2025, MPs raised concerns about the limited oversight of the Fund, arguing that its structure allows for potential mismanagement. Meanwhile, a section of MPs has criticized Gathungu’s office for publicizing audit reports before parliamentary approval, with National Assembly Majority Leader Kimani Ichung’wah accusing the Auditor General of fostering a “culture of anarchy” that could damage reputations without due process.</p>
<p dir="ltr">Public sentiment on X reflects growing skepticism about the Fund’s integrity. Posts on the platform have described the Hustler Fund as riddled with “scandals” and called for greater accountability, with some users demanding President Ruto’s resignation over the issue. One post from @moneyacademyKE on June 19, 2025, noted, “Auditor General reveals that Sh8 billion from the Hustler Fund can’t be traced. She says the money was approved but never requested or explained.” Another user, @itskipronoh, labeled the situation a “scandal” and called for stronger action.</p>
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<p dir="ltr">Launched in November 2022 as a cornerstone of President Ruto’s “bottom-up” economic model, the Hustler Fund was designed to provide low-income Kenyans, often referred to as “hustlers,” with access to loans ranging from Sh500 to Sh50,000. The initiative aimed to empower small-scale entrepreneurs and promote financial inclusion. However, since its inception, the Fund has faced criticism over its design and implementation. In December 2022, a group filed a case to have the Fund declared illegal, arguing it lacked a robust legal framework, though the case has not yet been resolved.</p>
<p dir="ltr">The Auditor General’s reports have further eroded public confidence, with Gathungu’s findings described as exposing “severe financial leakage” in what was once hailed as a transformative project. Her reputation as a fierce advocate for fiscal responsibility has made her a target of political backlash, with some MPs proposing measures to “tame” her office. Despite these challenges, Gathungu remains steadfast, with her work praised as a “testament to her relentless pursuit of fiscal justice.”</p>
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<p dir="ltr">As the controversy unfolds, the Hustler Fund’s future hangs in the balance. The Ministry of Cooperatives has pledged to provide the necessary documentation to address the Auditor General’s concerns, while Gathungu’s office continues to push for greater transparency. The National Assembly’s Public Accounts Committee is expected to review the submitted documents in the coming weeks to determine whether the Sh8 billion shortfall constitutes misuse or mismanagement.</p>
<p dir="ltr">For millions of Kenyans who have benefited from the Fund, the stakes are high. With over 4.9 million individuals eligible for insurance premium financing and plans for affordable housing products, the Hustler Fund remains a critical tool for economic empowerment. However, restoring public trust will require addressing the audit’s findings head-on and ensuring robust oversight to prevent future irregularities.</p>
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