Govt Addresses Reports That Ksh8 Billion From Hustler Fund Was Misappropriated

Mang’eni rejected accusations by Auditor General Nancy Gathungu, who had stated that the Ministry of Cooperatives failed to properly account for the funds.

Govt Addresses Reports That Ksh8 Billion From Hustler Fund Was Misappropriated
President William Ruto being taken through how to access the Hustler Fund during its launch on November 30, 2022. /PCS

Cooperatives Principal Secretary Susan Mang'eni has refuted claims that the Ministry misappropriated Ksh8 billion from the Financial Inclusion Fund, commonly known as the Hustler Fund.

In a statement on Thursday, June 19 and sent to Viral Tea, Mang’eni rejected accusations by Auditor General Nancy Gathungu, who had stated that the Ministry of Cooperatives failed to properly account for the funds.

In her audit report presented to Parliament on Tuesday, June 17, Gathungu noted that only Ksh12 billion of the approved Ksh20.2 billion budget had been utilised, leaving Ksh8.2 billion unaccounted for.

Mang’eni clarified that the Ksh8 billion was allocated to match savings contributions made by Hustler Fund beneficiaries, while Ksh200 million was designated for the fund’s operational setup.

MSMEs Development Principal Secretary Susan Mang’eni during a previous address. /FILE

"The initial capitalisation of the Fund was Ksh20.2 billion, with Ksh12 billion allocated towards lending and Ksh8 billion as counterpart funding to match the long-term (pension) savings for the Hustler Fund beneficiaries, as envisaged in the Public Finance Management (Financial Inclusion Fund) Regulations 2022, article 7 (1) (f). Ksh200 million was an allocation to support the operationalisation of the Fund," the statement reads in part.

"Contrary to reports appearing in some media, the Ksh. 8 billion in question, which had been allocated as counterpart funding to match the long-term savings of the Hustler Fund, was NOT drawn down from the National Treasury."

According to the PS, by June 30, 2023, the period under audit review, the fund was seven months old, and the matching savings product was still being developed.

"It would have been imprudent for the Fund to draw down the money only to idle in the commercial banks. We finally finalised the development of the savings product, and we undertook the first matching up during the 1st Anniversary of the Fund on 30th November 2023," added the statement.

To address the concerns, Mang'eni pledged to provide the National Assembly's Public Accounts Committee with all necessary documentation to show that the funds were not misappropriated.

She also updated the public on the Hustler Fund's progress, noting that it had significantly improved the lives of many Kenyans. So far, she said, over Ksh71 billion had been disbursed in personal and group loans to more than 26 million beneficiaries.

Mang’eni further highlighted that the Financial Inclusion Fund had successfully mobilised around Ksh4.8 billion in both voluntary and mandatory savings.

"In the meantime, the Hustler Fund continues to positively impact the lives of many Kenyans, as intended, a total of Ksh. 71 billion has so far been disbursed to over 26 million Kenyans in both personal, group and bridge loan products. We have mobilised close to Ksh 4.8 billion in savings, both voluntary and mandatory savings," she continued.

Mang'eni informed Kenyans that the Hustler Fund experience has established credit visibility of all its beneficiaries, which has since been crystallised in a Hustler Fund behavioural credit rating system, a nine-band ranging from A-C (A1, A2, A3, B1, B2, B3, C1, C2, C3), and that over 4.5 million beneficiaries out of the 9 million repeat customers are scoring within A and B grades, demonstrating good creditworthiness. 

She added that the bridge product launched last year during the Hustler Fund's second anniversary is graduating to a 30-day term loan and higher loan limits for good borrowers of the Hustler Fund. PS Mang'eni told Kenyans that bridge customers have the opportunity to establish a banking relationship and gain banking experience, facilitating their integration into mainstream financial institutions for enhanced access to credit for business financing. 

"We want to assure Kenyans that the Fund remains committed to its objective and purpose of deepening financial and credit inclusion among the most vulnerable segments of the economy. We will continue to develop innovative financial products to address credit market failures and unlock access to affordable credit," she assured.

A side-to-side image of Cabinet Secretary Wycliffe Oparanya and the Hustler Fund logo. /PARLIAMENT KENYA.NTV