For every Ksh500 borrowed from President William Ruto's pet project, the Hustler Fund, Ksh340 has been lost, according to a new report from the Kenya Human Rights Commission (KHRC).
The Hustler Fund, launched in November 2022 with an initial capital of Ksh50 billion, was tipped to be a game changer by providing affordable credit to millions of low-income Kenyans under the Kenya Kwanza administration's “bottom-up” economic plan.
However, according to KNRC's report, the Hustler Fund has been anything but beneficial, with both Kenyans and the government incurring financial losses in different forms.
The report, dubbed ''Failing the Hustlers,'' highlights the financial mechanics of the fund, which have been faulted as extremely flawed, largely because of the alarming default rate from Kenyans.
KHRC estimates that by the end of 2022, there was a default rate of 68.3 per cent, meaning for every Ksh500 loan disbursed, Ksh340 was effectively lost. These losses, according to the commission, did not factor in the systematic costs of setting up the program.
Factoring in the 8.2 per cent treasury bill rate, which represents the cost of borrowing funds, alongside the mandatory 3 per cent operational cost set by law, the cost to the taxpayer for each Ksh500 disbursed reaches approximately Ksh358.
With this in mind, the KHRC estimates that 71.5 per cent of all loans under the Hustler Fund are functionally unrecoverable.
In May, Cooperatives and MSMEs Cabinet Secretary Wycliffe Oparanya revealed that Ksh70 billion had been disbursed through the fund up until that date.
As per KHRC's analysis, with the alleged 71.5 per cent unrecoverable rate, taxpayers have allegedly absorbed losses of more than Ksh50 million on a daily basis.
“This is not financial empowerment. It is a loss-making scheme disguised as progress,” the KHRC said in the report. “Quick money has become lost money.”
Further, the commission faulted the Hustler Fund as an initiative that was launched without an oversight board, effectively violating the law.
On the question of reforming the fund, the commission believes it will be a futile effort since ''technical tweaks cannot fix its design, political, and legal flaws.''
Despite the criticism around the Hustler Fund, the government, through Principal Secretaries for MSMEs Development and Cooperatives Susan Mang’eni and Patrick Kilemi, attempted to have more allocations to the fund, but the move was rejected by lawmakers.
