Government Proposes KSh300 Million to Recover KSh12.5 Billion in Hustler Fund Loans

The government has approached Parliament seeking approval to spend KSh300 million aimed at recovering KSh12.5 billion in unpaid Hustler Fund loans. Around two million borrowers are reportedly behind on their repayments, prompting officials to explore ways to encourage repayment.

The State Department for Micro, Small and Medium Enterprises says the funds will focus on awareness campaigns rather than pursuing defaulters through legal action. Hustler Fund CEO Henry Tanui told lawmakers that the strategy “intends to rely on public awareness efforts to push borrowers to clear their debts.”

Since the inception of the Hustler Fund, KSh83 billion has been disbursed. KSh71 billion has been repaid, leaving a shortfall of KSh12.5 billion. Some lawmakers questioned whether allocating KSh300 million to recover this amount is justified. Wilberforce Oundo described the request as “curious,” pointing to the scale of spending relative to the recovery strategy.

Officials argue that educating borrowers will be more effective and less confrontational than legal measures. The campaign will use media messages, community workshops, and other sensitisation efforts to reach a wide audience and stress the importance of timely repayment.

In addition, the department has submitted other supplementary budget proposals. These include KSh27 million to hire technical staff, KSh156 million to support Uwezo Fund constituency committees, KSh100 million for office equipment, and another KSh100 million to finalize policies that govern fund operations.

Parliament will now review the budget requests and question the rationale behind using public money for loan recovery. Experts warn that awareness campaigns may not fully close the repayment gap, especially among defaulters who have ignored earlier obligations.

The debate underscores broader concerns about accountability in government spending. With billions of shillings disbursed under the Hustler Fund, lawmakers and citizens alike are keen to ensure funds are managed responsibly.

Officials maintain that encouraging repayment through education is a fairer approach than court action, but critics argue that without strict enforcement, significant debts could remain outstanding. The final decision will shape how Kenya balances recovery efforts with taxpayer money.