An audit by Auditor General Nancy Gathungu has exposed significant anomalies in the Hustler Fund, revealing that over Sh31 million was disbursed to individuals who were either underage or had not yet been born at the time of receiving the loans.
The audit of the funds disbursed in the financial year ending June 2024 found discrepancies in the birth records of some beneficiaries. According to the report, 44,167 individuals received loans amounting to Sh31,817,085 despite their birth records indicating they were either below 18 years or not yet born by June 30, 2024.
Additionally, auditors flagged 253,717 registered customers whose birth dates ranged from July 1, 2024, to December 2073—raising concerns over possible misrepresentation and weaknesses in the loan management system.
“Review of the customers and opted-in data sets provided revealed customers who were below the required mandatory age of 18 years and others whose birthdates were in the future after June 30, 2024,” reads the audit report.
Further analysis established that 1,377 registered customers were between 10 days and 17 years old. Of these, 1,186 individuals received loans totaling Sh681,395, despite being legally ineligible.
“The records are therefore unreliable, and the resultant data in the systems may not have adequate controls. In the circumstances, loan agreements with underage individuals are potentially unenforceable and increase the likelihood of default,” Gathungu stated.
Service Providers Implicated
Among the three contracted payment service providers for the Hustler Fund, Safaricom had the highest number of registered underage and unborn customers, totaling 244,566. Airtel followed with 10,128 cases, while Telkom had 398.
The audit also raised concerns over the government’s over-reliance on these service providers, pointing out the absence of an independent loan management system.
“The Fund is fully dependent on the service providers’ loan management systems, resulting in various challenges that may have been avoided if the Fund had its own loan management system. Further, management did not have a credit policy and collection strategy for non-performing loans,” the report noted.
Rising Default Rate and Funding Gaps
The revelations come amid concerns over a growing default rate among Hustler Fund beneficiaries. By June 2024, the government had allocated Sh12.8 billion to the fund, with Sh12.4 billion disbursed as loans.
Micro, Small, and Medium Enterprises (MSME) Principal Secretary Susan Mang’eni previously reported that by September 2024, Kenyans had borrowed Sh57 billion through the fund, with defaults amounting to Sh11 billion.
Meanwhile, Cooperatives and MSMEs Cabinet Secretary Wycliffe Oparanya is pushing for an additional Sh8.4 billion in funding to support the Financial Inclusion Fund.
Speaking before the National Assembly Departmental Committee on Trade, Industry, and Cooperatives on Monday, Oparanya highlighted that the MSMEs State Department requires Sh25.99 billion in the 2025/26 financial year. However, only Sh6.35 billion has been allocated—Sh1.72 billion for recurrent expenses and Sh4.63 billion for development—leaving a deficit of Sh19.64 billion.
“The Financial Inclusion Fund (Hustler Fund) requires an additional Sh8 billion for credit disbursement and Sh400 million for recurrent,” Oparanya said.
He further revealed that MSMEs had received Sh62 billion in loans through the Hustler Fund in the 2024/25 financial year, underscoring its significance in supporting small businesses.
