NAIROBI -The future of Kenya’s much-heralded Hustler Fund is in serious doubt. With soaring loan defaults and a deep budget cut from the National Treasury, the programme once billed as a lifeline for struggling entrepreneurs is now staring down a possible collapse.
At the heart of the crisis is money. The National Treasury has allocated just Sh1 billion for the fund in the next financial year. That’s a far cry from the Sh6 billion officials say is needed to keep the programme afloat.
Principal Secretary for Micro, Small and Medium Enterprises (MSMEs), Susan Mang’eni, confirmed on Tuesday that the government is weighing the possibility of writing off up to Sh6 billion in loans. These were disbursed in the fund’s early days mainly in November and December 2022 and may never be repaid.
“These are people who borrowed once and vanished,” Mang’eni told Parliament’s Trade, Industry and Cooperatives Committee. “We have about nine million repeat borrowers still active. But out of the total pool, nearly 4.5 million are in the top credit categories. The rest have dropped off.”
The committee did not take the matter lightly.
“You want more money to lend to Kenyans, yet you can’t recover what was already disbursed?” asked Marianne Kitany, the Committee’s Vice Chairperson and MP for Aldai.
Committee Chairperson Benard Shinali (Ikolomani) also raised concern, questioning the wisdom of pouring billions into loans when critical sectors like infrastructure are underfunded.
The Hustler Fund, formally known as the Financial Inclusion Fund, was launched in late 2022 as a cornerstone of President William Ruto’s “bottom-up” economic model. It was meant to offer affordable credit to Kenya’s underserved entrepreneurs, many of whom cannot access traditional bank loans. Over 25 million Kenyans have signed up so far.
But the initial excitement is giving way to hard realities.
Mang’eni defended the fund’s track record, pointing out that changes are already underway. A new tiered credit scoring system, she said, is being used to filter borrowers by repayment history. Only those with proven creditworthiness will qualify for future loans.
“We’re introducing new products like bomayangu to support repeat borrowers with clean records,” she said. “We’re also reviewing our legal framework to see at what point we can begin recovering funds from defaulters. The current law makes it difficult.”
But the clock is ticking. The government’s own data shows a significant chunk of the money is now unrecoverable. And with only a fifth of the requested budget approved for the next cycle, officials admit they are working with limited options.
“The Hustler Fund requires Sh5 billion, but we’ve only received Sh1 billion,” Mang’eni told MPs. “We are asking for the full reinstatement to meet rising demand.”
Still, doubts linger. Critics argue the fund’s loose early lending policies were bound to backfire. They now question whether it can be rescued, or if it will become yet another state-backed credit scheme that failed to deliver.
As debate continues, the fund’s millions of borrowers many of them small traders and informal workers will be watching closely. For them, the Hustler Fund is more than a headline. It’s a lifeline. One they can’t afford to lose.
