KHRC Demands Hustler Fund Shutdown Over Massive Loan Defaults and Misuse of Public Funds

The Kenya Human Rights Commission (KHRC) has delivered an explosive assessment of the Hustler Fund, calling for its immediate termination and reallocation of remaining resources.

In a report titled “Failing the Hustlers,” the rights body says the mobile-based loan scheme is beyond salvage, describing it as a “politically convenient but economically unsustainable initiative.”

Launched on November 30, 2022, with an initial Sh50 billion allocation under President William Ruto’s Bottom-Up Economic Transformation Agenda (BETA), the Hustler Fund aimed to provide affordable credit to millions at the bottom of the economic pyramid. However, the KHRC report reveals a 68.3% default rate, noting that “for every Sh500 loan disbursed, Sh340 is effectively lost.”

Despite disbursing over Sh36 billion to more than 21 million borrowers by September 2024, KHRC says the fund has failed to demonstrate measurable impact on enterprise growth or job creation. Factoring in defaults, operational costs (3%), and borrowing costs (an average 8.2% T-bill rate), the net cost to taxpayers is estimated at 71.5%.

“The numbers don’t add up,” KHRC states, “and the government continues borrowing just to keep the initiative afloat.”

The commission faults the fund’s poorly structured loan products, especially the 14-day repayment window, calling it “unrealistically short” and “a trap that drives borrowers into a cycle of debt.” Mandatory savings deductions have also been criticized by beneficiaries as confusing and counterproductive.

Additionally, the KHRC highlights opaque governance, lack of transparency, and centralized oversight, all of which undermine effectiveness. The Auditor General’s 2023 report had already flagged a 32% default rate, with Ksh.10.9 billion unrecovered out of Ksh.32 billion disbursed.

The highest default rate 78% was recorded among the elderly above 90 years, while youth under 30 also showed significant repayment struggles.

KHRC argues that the fund has been reduced to a post-election political tool rather than a genuine empowerment program. “The perception that it’s a handout has eroded credit discipline,” the report notes.

The commission now urges Parliament and the Executive to scrap the Hustler Fund entirely and redirect remaining funds to more effective schemes like the Women Enterprise Fund, Youth Enterprise Development Fund, and Uwezo Fund.

“Future public lending initiatives must be tied to financial literacy, performance-based lending, and transparency safeguards to prevent political capture and financial waste,” KHRC concludes.