NAIROBI, Kenya, Aug 4 – A new report by the Kenya Human Rights Commission (KHRC) has raised concerns over the government’s flagship Hustler Fund, describing it as a loss-making scheme disguised as economic empowerment.
Published on Monday, the report titled ‘Failing the Hustlers’ cites a default rate of 68.3 per cent with an estimated Sh340 lost for every Sh500 disbursed.
“The 68 per cent default rate means that for every Sh500 loan disbursed, Sh340 [is] effectively lost,” KHRC stated.
The rights commission also said the findings showed little evidence of economic empowerment linked to the loans.
“By September 2024, over Sh53 billion had [been] disbursed. But the study found no measurable impact on enterprise development or job creation,” the commission said.
Launched on November 30, 2022 with a startup capital of Sh50 billion, the Hustler Fund was a key component of the Kenya Kwanza administration’s Bottom-Up Economic Transformation Agenda (BETA).
True cost
The initiative promised to expand access to credit for individuals and businesses and has, according to official government data, disbursed over Sh36 billion to 21 million individuals and more than 1.1 million members in 51,000 registered groups.
However, the KHRC report challenges the fund’s financial sustainability, estimating the true cost to taxpayers at 71.5 per cent.
The figure takes into account the high default rate, the government’s borrowing costs through Treasury bills, and an additional 3 percent operational cost.
“With the national fiscal deficit already at 3.5 per cent of GDP, the government is forced to borrow, mainly through Treasury bills, to keep this initiative afloat. At an average T-bill rate of 8.2 percent (as of December 2022), plus the three percent operational cost mandated by law, the real cost of credit balloons,” the report notes.
KHRC concludes that the fund’s high default rate and dependence on borrowing render it an unsustainable and costly venture for Kenyan taxpayers.
