Gov't plots deducting M-PESA balances to recover Sh7B from Hustler Fund defaulters

This initiative involves accessing M-Pesa accounts and deducting airtime balances of 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, revealed that discussions are ongoing with Safaricom to facilitate this recovery process.

The government has identified the defaulters, primarily those who borrowed funds in the initial months after the fund's launch in November 2022.

Nkukuu emphasised that many of these individuals have the financial means to repay their loans but have chosen not to do so, stating, "It’s not that they cannot pay. They are people who just don’t want to pay."

Hustler Fund CEO Elizabeth Nkukuu Hustler Fund CEO Elizabeth Nkukuu Pulse Live Kenya

Since its inception, the Hustler Fund has disbursed approximately Sh57.8 billion to 24 million Kenyans, with only two million borrowers maintaining good financial credit.

The fund aims to provide affordable credit to individuals previously excluded from mainstream financial systems.

Each loan carries an interest rate of 8%, with 5% retained for savings, which has accumulated to Sh3.5 billion.

Nkukuu indicated that legal avenues will be pursued if voluntary repayment does not occur after initial reminders.

The government is prepared to employ a "nagging" technique, which involves frequent reminders via phone calls before resorting to deductions from M-Pesa and airtime deductions.

Principal Secretary for Micro, Small, and Medium Enterprises Susan Mang'eni supported this approach, noting that defaulters have had ample time—nearly two years—to repay their loans.

Members of the Parliamentary committee expressed concerns regarding the lack of insurance for the funds being dispensed, questioning how the government can issue loans without adequate safeguards against defaults.

Hustler Fund CEO Elizabeth Nkukuu Hustler Fund CEO Elizabeth Nkukuu Pulse Live Kenya

Nkukuu confirmed that the Hustler Fund is not insured, which has led to the decision for forceful recovery measures.

This aggressive strategy marks a significant shift in how the government intends to manage loan defaults within its financial inclusion initiatives, reflecting broader efforts to ensure accountability and fiscal responsibility among borrowers.