The Kenya Human Rights Commission (KHRC) is calling for scrapping of Hustler Fund which it says has failed to meet set out objectives since being established in 2022.
In its study dubbed Failing the Hustlers, the commissions say the fund has neither pushed for financial inclusion nor provided meaningful economic empowerment to its target demographic.
Since roll out in November 2022, official figures show Hustler Fund has disbursed a total of Ksh 73.9 billion in loans to various segments of customers including individuals and groups.
However according to KHRC, the fund is faced with numerous challenges such as poorly tailored loan products, unrealistic repayment periods, exclusionary delivery channels and misunderstood and misused savings component of the fund.
“Evidence has further shown that there has been a significant misallocation of public funds via the Hustler Fund, with a default rate of 68.3pc, a net loss of 71.5pc, and an opaque governance structure flagged by the Auditor General,” said KHRC.
Latest data by the Ministry of Cooperatives and MSMEs Development shows that Ksh 67.5 billion has been lent out to 26.25 million individual Kenyans who have saved Ksh 3.3 billion on the platform.
Additionally, the fund has extended loans worth Ksh 196.6 million to 58, 704 groups and another Ksh 6.2 billion as bridge loans to 632,268 customers.
The commission says loan sizes ranging from Ksh 500 to Ksh 1,000 were too small to start or grow businesses as the repayment terms of 14 days were unrealistic, and disbursements were poorly matched to actual financial needs.
“The Fund’s highly politicized origins and centralized structure further undermine its legitimacy. It does not respond to genuine financial needs; instead, it serves as a post-election reward mechanism and a tool for political messaging. The widespread perception that it is a handout—and therefore repayment is optional—has destroyed the credit discipline and financial education needed for sustainable lending,” the commission added.
The human rights watchdog has further taken issues with the administration of the fund and its centrality given the inability by the Office of the Auditor General to render an audit opinion.
OAG cited missing documentation and unsupported transactions, unavailability of publicly disclosed loan allocation formula, lack of transparency on repayment trends by region or sector as well as and no clear criteria for performance assessment.
KHRC now was Hustler Fund to be decommissioned and resources to be reallocated to existing funds such as Women Enterprise Fund, Youth Enterprise Development Fund (YEDF) and Uwezo Fund.
“The government must ensure that any public lending scheme includes mandatory financial literacy, training on record keeping, and market access support. There should be phased loan limits tied to demonstrated business growth and repayment capacity so that taxpayers’ money is not lost through default,” said KHRC in the study.
