In a hurry? Here’s a quick summary…
- The government plans to recover Sh7 billion from over 13 million Hustler Fund defaulters through M-Pesa and airtime deductions, after initial reminders.
- Legal action may follow for non-compliance, as only 2 million out of 24 million borrowers have maintained good credit since the fund’s launch in 2022.
The government is considering decisive measures to recover Sh7 billion in unpaid loans from the Hustler Fund, with a particular focus on over 13 million defaulters.
This recovery plan may involve accessing M-Pesa accounts and deducting airtime balances from those who have failed to repay their loans.
During a session with the National Assembly’s Special Funds Committee, Elizabeth Nkukuu, the acting CEO of the Hustler Fund, disclosed that discussions are underway with Safaricom to facilitate the recovery process.
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The defaulters have been identified, primarily consisting of individuals who borrowed funds shortly after the fund’s launch in November 2022.
Nkukuu highlighted that many defaulters have the means to repay but have chosen not to, stating, “It’s not that they cannot pay. They are people who just don’t want to pay.”
Since its inception, the Hustler Fund has disbursed approximately Sh57.8 billion to 24 million Kenyans.
However, only two million borrowers have maintained good financial credit. The fund aims to provide affordable loans to individuals previously excluded from mainstream financial systems.
Each loan carries an 8% interest rate, with 5% allocated to savings, which has accumulated to Sh3.5 billion.
Nkukuu also mentioned that legal action would be pursued if borrowers fail to make repayments after receiving reminders.
The government plans to implement a “nagging” strategy, involving frequent phone call reminders before moving forward with deductions from M-Pesa accounts and airtime.
Principal Secretary for Micro, Small, and Medium Enterprises Susan Mang’eni supported this approach, noting that defaulters have had nearly two years to repay their loans.
Parliamentary committee members raised concerns about the lack of insurance for the Hustler Fund, questioning how the government could issue loans without sufficient safeguards against defaults.
Nkukuu confirmed that the fund is not insured, which has prompted the decision to pursue forceful recovery efforts.
This marks a significant shift in the government’s approach to managing loan defaults, reflecting broader efforts to promote accountability and fiscal responsibility among borrowers.