By Wahome Ngatia
In a country where economic promises often arrive wrapped in political fanfare, the Hustler Fund was launched in November 2022 as a flagship initiative under President William Ruto’s Bottom-Up Economic Transformation Agenda (BETA). Marketed as a financial inclusion tool for Kenya’s underserved, the Fund quickly became a symbol of hope—and controversy.
Now, a blistering report by the Kenya Human Rights Commission (KHRC) titled Failing the Hustlers has reignited debate over the Fund’s legitimacy, sustainability, and impact. The Ministry of Cooperatives, led by Cabinet Secretary Wycliffe Oparanya, has fired back, calling the report “skewed, elitist and politically motivated.” So who’s telling the truth? Let’s unpack the claims, counterclaims, and cold facts.
KHRC: Failing the Hustlers
KHRC’s report, Failing the Hustlers, pulls no punches. It argues that the Hustler Fund has failed to deliver meaningful economic empowerment, instead creating a cycle of debt among the very people it was meant to uplift.
“For every 500 shillings disbursed, the government is losing 340,” the report states. “With operational costs and borrowing rates, the loss climbs to 71.5%.”
KHRC Executive Director Davis Malombe was even more blunt during the report’s launch:
“This is not empowerment; it’s entrapment. It’s turning struggling Kenyans into chronic borrowers.”
The report describes the loans as “predatory-lite”—small (often Ksh 500 to 1,000), deducted at the source (5% savings), and repayable in just 14 days. It claims that such terms make it almost impossible for recipients—mostly small traders and informal workers—to use the funds productively.
KHRC also cited a default rate of 68.3% in the Fund’s early months as evidence of systemic failure and criticized a lack of transparency, pointing out that the Auditor General was unable to audit the Fund due to missing documentation.
The kicker? KHRC concluded that the Fund was less about economic inclusion and more about political optics—what they called “a post-election loyalty reward system.”
“Quick money has become dead money. If the government is truly genuine about empowering Kenyans at the bottom of the pyramid, it must go beyond populist headlines,” said Malombe.
The Government’s Rebuttal: Numbers Don’t Lie
In a strongly worded five-page statement, the Ministry of Cooperatives and MSMEs dismissed the KHRC report as “sensationalist,” “premature,” and “methodologically flawed.”
“The report relies solely on early data from the Fund’s first 7 months,” the Ministry said. “It fails to account for the significant improvements made thereafter.”
The Ministry claims the default rate has fallen significantly, citing June 2023 data showing that 67.6% of disbursed loans had been repaid—with Ksh 60 billion repaid out of Ksh 72 billion disbursed.
They also highlighted the Fund’s growth and uptake: Over 26 million Kenyans have accessed the Fund. 9 million borrowers are classified as consistent or repeat users. Ksh 5 billion in savings has been accumulated through the mandatory savings component.
“This Fund has redefined financial inclusion,” the statement read. “It’s the largest digital financial inclusion initiative in Kenyan history.”
Additionally, the Ministry pointed out that the initial capital was Ksh 14 billion, not Ksh 50 billion as KHRC claimed. The fund’s portfolio expanded through revolving credit, meaning repayments were re-loaned to other users, creating a sustainable credit cycle.
“The title of the report explicitly betrays the whole purpose of the study. Professionalism demands a response from key players. The conclusions made are keen to sentence the Fund to death without trial,” Oparanya said about the report.
What Do the Numbers Really Say?
To parse through both sides, we reviewed Auditor General reports, independent evaluations, government data, and media analyses.
- Loan Design Critique Has Merit
The small size and short tenure of initial loans (14-day repayment windows) are real design limitations. Multiple borrowers have reported using loans for household needs, not business, leading to repayment struggles.
However, the loan limit increases with repayment history, and the government introduced a “Bridge Loan” product of up to Ksh 150,000, which KHRC fails to mention.
- KHRC’s Loss Calculation Seems Overstated
KHRC’s 71.5% “loss to taxpayers” assumption combines early default figures, interest rates, and estimated operational costs—but doesn’t fully account for repaid amounts or updated portfolio data. By mid-2024, over 83% of disbursed loans had been repaid, per government figures.
Even if some loans are written off, the net recovery is significantly better than KHRC implies.
- Political Framing Lacks Evidence
While it’s fair to say that the Fund was a flagship Kenya Kwanza campaign promise, the report’s insinuation that it’s merely a “post-election loyalty reward” leans into conjecture more than proof. No data in the report connects Fund disbursement to voter regions, political affiliation, or patronage systems.
- Governance Weaknesses Are Real
Here, KHRC is on firmer ground. The Auditor General’s disclaimer—citing insufficient records—was real and serious. Further, the Fund lacked a formal board at launch, and procurement data has yet to be made public.
- Impact on Financial Inclusion:
Independent studies, including one by the Central Bank of Kenya, suggest the Fund has outpaced traditional institutions like the Agricultural Finance Corporation in grassroots financing.
Between the Rhetoric and the Results
The KHRC report raises important concerns—especially about transparency, auditability, and design flaws in the early phases. But it also leans heavily on dated figures and rhetorical overreach. Conversely, the government’s rebuttal offers optimism, but glosses over the significant growing pains and real struggles borrowers have faced.
What’s clear is this: the Hustler Fund is neither a complete failure nor an unqualified success. It is a bold experiment in financial inclusion, one that still needs refining, better oversight, and rigorous impact measurement.
