Billions of shillings deducted from Hustler Fund loans as savings remain outside the State-backed micro-pension scheme more than two years after the government approved their transfer, exposing a regulatory gap that threatens the retirement security of informal sector workers.
Under changes introduced in November 2023, Hustler Fund borrowers are required to save five per cent of their loan amounts, split between short-term savings and long-term retirement savings.
Thirty per cent of the compulsory deductions go towards the short-term component, while the remaining 70 per cent is earmarked for long-term (pension) savings intended to support retirement after the age of 60.
The National Treasury’s latest budgetary performance report shows that the voluntary pension programme mobilised a measly Sh14.06 million in the year ended June 2026 against a target of Sh3.6 billion.
It blames the 99.61 per cent underperformance on failure to transfer the Hustler Fund’s pension component to the Kenya National Entrepreneurs Savings Trust (KNEST), a State entity incorporated nearly five years ago to oversee a national pension scheme for more than 18 million informal-sector workers.
“The shortfall arose from non-remittance of the Hustler Fund pension savings component (under FIF ecosystem) into KNEST,” the Treasury says in its performance report.
Henry Tanui, chief executive of the Financial Inclusion Fund, which administers the Hustler Fund, said existing regulations do not recognise KNEST, preventing the fund from remitting the money until the rules are amended.
“If you read our regulations, our regulations are yet to recognise KNEST. So you could not expect us to just be remitting without any proper engagement,” he told Nation in a telephone interview.
“Therefore, we are not saying we refuse to remit; it is the regulations which are governing the management of the fund that are still guiding us.”
The explanation exposes a gap between the government’s decision to transfer the long-term savings on Hustler loans and the legal framework governing their administration, leaving KNEST without the funds and data needed to manage the long-term component.
An inter-ministerial committee approved the expansion on April 4, 2024, assigning KNEST responsibility for managing the 70 per cent long-term savings component held by the Hustler Fund.
The National Treasury in Nairobi.
Photo credit: File I Nation Media Group
The Treasury’s disclosure comes despite the enrolment of nearly 1.5 million informal-sector workers into the voluntary pension coverage programme during the year ended June, more than twice its target of 700,000.
The Sh14.06 million mobilised represented a marginal 0.39 per cent of the annual target, raising questions about whether the government’s push to register informal workers is translating into meaningful retirement savings.
Mr Tanui said the Hustler Fund and KNEST were independent entities and that the fund would continue operating under its existing rules until they were appropriately amended to facilitate cooperation.
“As it is now, we are working as a Fund,” he said, adding that borrowers have access to their savings and account statements through their phones using their national identity numbers as account numbers.
The Public Finance Management (Financial Inclusion Fund) Regulations, 2022, allow the Hustler Fund administrator to open pension savings accounts, subject to approval from the fund’s board and the National Treasury.
“The administrator may open such other bank accounts in the Central Bank of Kenya or commercial banks including trust accounts, or pension saving accounts with the approval of the Board and the National Treasury to further the objects and purpose of this Fund,” the regulations state in part.
Auditor-General Nancy Gathungu.
Photo credit: Wilfred Nyangaresi | Nation Media Group
The regulatory dispute echoes concerns raised by Auditor-General Nancy Gathungu in her latest report, which found that KNEST had not received the funds or data needed to implement its expanded mandate.
By September 2025, when the audit was conducted, neither the money nor the accompanying data had been transferred, and there was no communication indicating when this would happen.
KNEST was incorporated on December 9, 2021, to oversee a national pension scheme for more than 18 million informal-sector workers, but the Auditor-General found that it had not rolled out the scheme for voluntary membership at that time.
“The Trust may not justify the delay in implementation of the mandate despite being fully funded by the National Treasury,” Ms Gathungu said.
Separately, the State Department for Micro, Small and Medium Enterprises Development reported that cumulative savings through the Hustler Fund reached Sh5.8 billion by June 2026, exceeding its goal of Sh5 billion.
The figure covers savings reported within the wider fund and does not establish how much represents the long-term component due to KNEST or whether the money is available for transfer.
The MSMEs department attributed the overperformance to growth in the revolving fund, which increased savings as a share of total disbursements.
The report shows that credit issued through the revolving fund dropped to Sh16.52 billion in the year ended June 2026 from Sh17.94 billion a year earlier, but stayed well above its target of Sh10 billion.
