The government has reduced the budget for the Hustler Fund from KSh10 billion to KSh5 billion for the 2023/24 financial year.
This is a significant cut from the KSh20 billion that was allocated to the fund in the previous financial year.
The budget cut comes amid concerns about high default rates on microloans.
In August 2023, the default rate on Hustler Fund loans was 29%, which is higher than the default rate on loans from commercial banks, saccos, and microfinance banks.
The high default rate has attracted the attention of President Ruto, who is banking on the Hustler Fund to drive his campaign agenda of uplifting the “hustlers”.
President Ruto has said that the Hustler Fund is not for free and that borrowers must repay their loans. He has also said that borrowers who do not repay their loans will not be able to access other loans from the Hustler Fund.
The government says that it reviews credit scoring under the Hustler Fund every four months to manage risk. The latest data shows that the government has disbursed personal loans valued at Sh36.87 billion to 21,245,811 customers. The interest rate on these loans is 8% per year.