Gov’t to Deploy Digital Tracker for 19 Million Hustler Fund Defaulters, Says CS Oparanya

The Kenyan government has announced a decisive initiative to address the high default rate plaguing the Hustler Fund.

Speaking at the Kenya Private Sector Alliance (KEPSA) annual conference on Friday, Cooperatives and MSME Development Cabinet Secretary Wycliffe Oparanya revealed that an alarming 19 million out of 21 million borrowers have defaulted on their loans. To tackle this challenge, the government is developing a digital system to track down defaulters and ensure loan repayment. Oparanya emphasizes the public nature of the fund and the importance of repayment to maintain its sustainability.

He warns that defaulters should expect government representatives to contact them regarding their outstanding debts. The Hustler Fund, introduced by President William Ruto, offers loans at a competitive 7% annual interest rate on a reducing balance basis. Despite disbursing Sh54 billion to borrowers and attracting over 8 million repeat borrowers, the high default rate threatens the fund’s viability. Moses Banda, an adviser at the Presidential Economic Transformation Secretariat, notes that 23.4 million Kenyans had borrowed from the fund in 20 months, mobilizing Sh3 billion in savings.

In addition to pursuing defaulters, the government plans to reward consistent borrowers who maintain good repayment records. According to the CS, some individuals have already seen their loan limits increase to two million shillings as a result of their responsible borrowing behaviour. Oparanya has urged borrowers to create favourable conditions for their businesses while the government works to improve the fund’s operations. The crackdown on defaulters is part of a broader strategy to recover billions in unpaid loans and ensure the fund’s long-term sustainability. Notices have been sent to borrowers who have defaulted for over a year, warning of potential penalties for non-repayment.

As of October last year, the total amount of unpaid loans stood at a concerning Sh9.9 billion. The Hustler Fund’s launch in November 2022 was a significant milestone in Kenya’s efforts to support small businesses and individuals. Attended by high-ranking government officials, including President Ruto and Deputy President Rigathi Gachagua, the fund was hailed as a potential game-changer for the country’s economic landscape.