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<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 August 5, 2025, 6:30 am</div><div id="pl-7379"  class="panel-layout" ><div id="pg-7379-0"  class="panel-grid panel-no-style" ><div id="pgc-7379-0-0"  class="panel-grid-cell"  data-weight="1" ><div id="panel-7379-0-0-0" 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 Kenyan government has issued a robust defense of the Hustler Fund, a flagship financial inclusion initiative, in response to a report by the Kenya Human Rights Commission (KHRC) that labeled the program as politically driven and economically unsustainable. The report, released on August 4, 2025, called for the immediate scrapping of the fund, citing high default rates, governance issues, and a lack of transparency. The government, through the Cooperatives Cabinet Secretary, has dismissed these claims as misleading and politically motivated, emphasizing the fund's transformative impact on millions of Kenyans.</p>
<p dir="ltr">The Hustler Fund, launched in November 2022 with an initial capital of 50 billion Kenyan Shillings, aims to provide affordable loans to low-income Kenyans, particularly those excluded from formal financial systems. The initiative allows borrowers to access loans ranging from 500 to 50,000 Kenyan Shillings through mobile platforms, with a repayment period of 14 days at an 8 percent annual interest rate. The program also incorporates a savings component, with 5 percent of each loan withheld as mandatory savings, split between long-term and short-term accounts.</p>
<p dir="ltr">The KHRC report, titled "Failing the Hustlers," highlighted a 68 percent default rate by December 2022, noting that for every 500 Kenyan Shillings disbursed, approximately 340 Kenyan Shillings remained unrecovered. The report argued that the fund's short repayment period and lack of stringent loan requirements contribute to its financial unsustainability. It also criticized the program as a post-election political tool, claiming that its design fosters a perception of loans as handouts, undermining credit discipline. The report pointed out that the highest default rates were among elderly borrowers above 90 years (78 percent), followed by those under 30 years (12 percent).</p>
<p dir="ltr">In response, Cooperatives Cabinet Secretary Wycliffe Oparanya rejected the KHRC's findings during a press briefing on August 4, 2025. He argued that the report lacked credibility due to the commission's failure to consult the government for input or clarification. Oparanya emphasized that the Hustler Fund has empowered over 26 million Kenyans, with 9 million actively borrowing. He stated that the fund has significantly improved access to credit for small-scale entrepreneurs and low-income individuals, describing it as a cornerstone of the government's financial inclusion agenda.</p>
<p dir="ltr">Principal Secretary for Micro, Small, and Medium Enterprises (MSMEs) Susan Mang'eni echoed Oparanya's sentiments, questioning the timing and intent of the KHRC report. She highlighted the fund's achievements, including the disbursement of 65.5 billion Kenyan Shillings in loans, of which 53.8 billion Kenyan Shillings have been repaid. Mang'eni acknowledged challenges with loan recovery, particularly among early borrowers, with approximately 10 million Kenyans defaulting on 6 billion Kenyan Shillings borrowed in November and December 2022. However, she clarified that the government is actively pursuing defaulters through community-based mechanisms, such as engaging chiefs and assistant chiefs, rather than listing them with the Credit Reference Bureau (CRB).</p>
<p dir="ltr">The government also addressed concerns raised by the Auditor General, who flagged financial improprieties, including an unaccounted 8 billion Kenyan Shillings and non-performing loans totaling a similar amount. Mang'eni clarified that the 8 billion Kenyan Shillings was allocated as counterpart funding for long-term savings and was not withdrawn from the National Treasury. She further noted that the government is exploring innovative ways to integrate the Hustler Fund with other initiatives, such as financing Social Health Authority (SHA) premiums and supporting affordable housing projects.</p>
<p dir="ltr">Critics, including lawmakers, have expressed skepticism about the fund's management. Members of the National Assembly Special Funds and Accounts Committee recently directed the Cooperatives Ministry to provide a detailed list of defaulters, including their names, amounts owed, and contact details, to verify borrower information. Some MPs have described the fund as poorly conceptualized, with one lawmaker calling it a "joke" due to its high default rates and lack of clarity.</p>
<p dir="ltr">Despite these challenges, the government remains committed to the Hustler Fund's mission. Oparanya emphasized that the program is designed to support hustlers without disrupting their businesses, and recovery efforts will prioritize dialogue over punitive measures. The government has also resisted calls to write off the 6 billion Kenyan Shillings in bad loans, with the Auditor General cautioning against such a move without evidence that borrowers are untraceable or unable to repay.</p>
<p dir="ltr">As the debate over the Hustler Fund's future continues, the government faces the challenge of balancing financial sustainability with its goal of empowering Kenyans at the bottom of the economic pyramid. The outcome of this controversy will likely shape public perception of the Kenya Kwanza administration's economic policies and its commitment to inclusive development.</p>
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