Kenyans who defaulted on Hustler Fund loans will be locked out of future borrowing from financial institutions, the government has announced, as it unveiled fresh plans to scale up credit access and market linkages for Micro, Small and Medium Enterprises (MSMEs).
The tough stance was revealed on Tuesday in Mombasa by Cabinet Secretary for Cooperatives and MSMEs Development, Wycliffe Oparanya. As of May this year, the state had recorded Sh6 billion in defaults from hustler fund borrowers.
“Before any bank approves a loan, it will first check if the borrower has a history with the Hustler Fund and whether they honoured their repayment obligations. This is about accountability. If you took a loan from the Hustler Fund and failed to repay, you will not access further credit from any bank,” Mr Oparanya warned.
Cabinet Secretary for Cooperatives and Micro, Small and Medium Enterprises (MSME) Development Wycliffe Oparanya before a National Assembly Committee on August 26, 2025.
Photo credit: Dennis Onsongo | Nation
He spoke during the Kenya Public-Private Sector MSMEs Dialogue, where over 3,000 entrepreneurs gathered to engage state officials on policy reforms aimed at empowering small businesses.
Since its launch, the Hustler Fund has disbursed about Sh70 billion to over 26 million Kenyans, becoming a critical source of capital for small business owners across the country.
According to Mr Oparanya, the fund was designed to offer affordable financing and unlock opportunities for the informal sector, which forms the backbone of Kenya's economy.
“Nine in every ten Kenyans are engaged in MSMEs. These enterprises drive our economy, and our responsibility is to ensure they have access to affordable finance and a stable market environment,” he added.
To support this goal, the government has introduced a range of financial tools and programs. In addition to the Hustler Fund, Kenyans can now access the Uwezo Fund and the Credit Guarantee Scheme. The Credit Guarantee Fund allows businesses with a good track record to access loans of up to Sh10 million, backed by government guarantees.
“For those who demonstrate discipline and build a good credit score, the Hustler Fund allows you to borrow up to Sh150,000. But for those who default, access to any form of credit will be denied,” Mr Oparanya said.
The Cabinet Secretary also emphasised the importance of creating a cashless economy, saying the government is promoting digital transactions to reduce time wasted queuing at banks and increase transparency.
“We want to encourage Kenyans to buy and sell using their phones. It’s faster, safer and more efficient,” he said.
The Hustler Fund has disbursed about Sh70 billion to over 26 million Kenyans.
Photo credit: Nation Media Group
In addition to financial support, the government is also focused on ensuring market access for small businesses. One major initiative includes the East African MSME Expo, scheduled for November in Nairobi, where small business owners from all 47 counties will be selected to showcase their products for 10 days.
Products that meet the Kenya Bureau of Standards (Kebs) quality requirements will be eligible for export across all eight East African Community (EAC) countries.
“We expect around 5,000 participants and those whose products meet the required standards will get a chance to begin exporting their goods,” Mr Oparanya said.
The government is also working closely with county governments to create friendly policies and designated trading areas for small-scale traders. Oparanya condemned instances in which county enforcement officers chase vendors off the streets, saying it reflects poor planning and a lack of designated spaces.
“If you see askaris chasing traders, it means the county has not provided adequate space for them to do business. That’s unfair because they are simply trying to earn a living,” he said.
To further support innovation and growth, the government has introduced a Startup Bill, which aims to guide new businesses through their early stages with support in sensitisation, financial literacy and mentorship.
Mombasa Governor Abdulswamad Sheriff Nassir, reaffirmed the county’s commitment to creating a conducive environment for entrepreneurs. However, many small businesses are still grappling with high taxation and regulatory burdens, he said.
Meanwhile, Mr Peter Lengapiani, CEO of the Uwezo Fund, highlighted the fund’s role in empowering community groups to tap into emerging sectors such as the blue economy.
“We are working with stakeholders to help SMEs grow, improve product quality and access markets. We have been helping them register their groups, market their products, and access capital to expand their ventures,” he said.
Mr Lengapiani urged more groups to register in order to benefit from funding and support for business development.
“We want more Kenyans to formalise their businesses so they can grow, create jobs, and contribute meaningfully to the economy.”
