Auditor-General Nancy Gathungu.
Auditor-General Nancy Gathungu has criticised plans by the government to write off more than Sh6 billion in loan defaults from the controversial Hustler Fund, citing ‘unresolved issues’.
Ms Gathungu raised the red flag as she appeared before MPs who are members of the Budget and Appropriations Committee (BAC) of the National Assembly.
“If you are claiming that Sh6 billion has not been accounted for, various questions emerge,” the Auditor-General said.
“Do you have the list of the individuals and the amount advanced to them? Are you able to prove that the individuals are untraceable or unable to pay and therefore, the amount is unrecoverable? I think that is where we should start,” Ms Gathungu told the committee.
The committee is chaired by Alego Usonga MP, Samuel Atandi.
Susan Mang’eni, the Principal Secretary in the State Department for Micro, Small and Medium Enterprises (MSME) Development, while appearing before the Trade, Industry, and Cooperatives Committee to defend allocation to her State Department for the 2025/26 fiscal period, said that the government could seek a write-off of the Sh6 billion if ongoing recovery efforts do not bear fruit.
The PS told MPs that between Sh5 and Sh6.3 billion is at risk of loss following default by nearly 10 million Kenyans who took the loan but have defaulted.
“About 10 million Kenyans borrowed about Sh500 each in November 2022 and end of December 2022 and never repaid,” Ms Mang’eni told the Trade Committee on the evening of Tuesday, May 21, 2025.
Ms Susan Mang’eni, the Principal Secretary in the State Department for MSMES, takes oath of office during the swearing-in of Principal Secretaries at State House, Nairobi on December 2, 2022
“We are tracing them and if we cannot recover the money, we will be considering a write-off of about Sh6 billion for individuals who borrowed and vanished. But we are not at the write-off stage at this moment because we are pursuing defaulters,” she said.
The Hustler Fund, one of President William Ruto’s pet projects and his campaign mantra ahead of the August 2022 General Election, is meant to provide Kenyans at the bottom of the economic pyramid, including youth and women access to financial services.
This includes credit, savings, insurance, and investment products for the unserved and underserved population. The fund has been issuing loans of between Sh500 and Sh50,000 to individuals for a tenure of 14 days at an interest rate of eight percent per annum.
Five percent of the disbursement to each borrower has been withheld as savings whereas 70 percent has been retained as long-term savings with the balance making up short-term savings.
Despite the failure to recover the Hustler fund amounts, the government through the State Department for MSME Development, had sought an additional Sh5 billion towards the kitty in the 2025/2026 financial year, whose budget-making process is ongoing in the National Assembly.
Baringo County Woman Representative Florence Jematiah was not surprised by the proposal to allocate more money to the Hustler fund kitty.
“Kenyans were lent money but have since defaulted and here we are, we want to allocate more money,” said Ms Jematiah.
The MSME requests were contained in the 2025 Budget Policy Statement (BPS) that was adopted by parliament in February this year, which had proposed an allocation of Sh2 billion towards the kitty.
However, in the printed estimates undergoing processing in the National Assembly, the National Treasury slashed the amount by half.
The Trade, Industry, and Cooperatives Committee, chaired by Ikolomani MP Bernard Shinali, recently revealed to BAC that the committee made a resolution to retain the amount as contained in the estimates by Sh1 billion.
“We made the decision because of their failure to recover the Sh6 billion in loan amounts to the Hustlers. They should recover the amount first before seeking for more,” said Mr Shinali.
Ms Mang’eni further revealed that 9 million of the 25.8 million Hustler Fund enrolled customers are good borrowers who have accessed the mobile money loans since inception in 2022.
“The Financial Inclusion Fund (Hustler Fund) requires Sh5 billion but was only allocated Sh1 billion,” Ms Mang’eni said in submissions to the Trade, Industry and Cooperatives committee.
