The Kenya Human Rights Commission (KHRC) has released a scathing new report, “Failing the Hustlers,” sharply criticizing the government’s flagship Hustler Fund initiative. The report concludes that the Fund, launched with much fanfare, is structurally unsound, economically unsustainable, and politically manipulated, ultimately recommending its complete shutdown. This damning assessment challenges the core of the Kenya Kwanza regime’s “bottom-up” economic transformation agenda, which positioned the Fund as a panacea for financial exclusion among low-income Kenyans.

The KHRC’s findings, unveiled in Nairobi today, paint a grim picture of a program that, despite disbursing billions of shillings, has allegedly failed to deliver any measurable impact on enterprise development or job creation. Instead, the report warns that the Hustler Fund’s design inadvertently locks borrowers into a debt cycle, pushing vulnerable Kenyans deeper into financial distress.

The Hustler Fund: A Promise Unfulfilled

The Hustler Fund, officially known as the Financial Inclusion Fund, was a cornerstone promise of President William Ruto’s 2022 presidential campaign. Launched in November 2022 with an initial capital injection of Sh50 billion (approximately $409 million USD at the time), it was marketed as a revolutionary approach to financial empowerment. Its stated objectives were ambitious: to boost critical sectors such as agriculture, Micro, Small, and Medium Enterprises (MSMEs), healthcare, housing, and the creative economy by providing accessible and affordable credit to millions of Kenyans traditionally excluded from formal financial systems.

The Fund aimed to address the widespread issue of predatory digital loans that often trapped low-income citizens in cycles of high-interest debt. By offering credit at a significantly lower interest rate of 8% per annum (compared to often exorbitant rates from unregulated digital lenders), the government envisioned a pathway to economic liberation for the “hustlers” – a term used to describe ordinary Kenyans striving to make a living, often in the informal sector.

However, the KHRC study contends that these lofty promises have not been realized, and the Fund’s operational realities diverge sharply from its intended impact.

Structural Flaws: The Debt Cycle Mechanism

The “Failing the Hustlers” report meticulously dissects the fundamental design flaws of the Hustler Fund, arguing that these inherent weaknesses are actively undermining its stated goals.

Firstly, the loan amounts offered to first-time individual borrowers are remarkably small, ranging from just Sh500 to Sh1,000 (approximately $3.50 to $7 USD). The KHRC argues convincingly that such minuscule sums are insufficient to start, sustain, or meaningfully grow any business. For an entrepreneur, even at the micro-level, this amount barely covers basic operational costs, let alone significant investment in inventory, equipment, or expansion. While the Fund later introduced larger loans for groups (up to Sh250,000) and MSMEs (limits to be announced), the initial individual loan structure, which most Kenyans accessed, appears fundamentally inadequate for genuine enterprise development.

Secondly, the repayment period of just 14 days is deemed “unrealistic” by the KHRC. For individuals operating in the informal economy, where income streams are often irregular and unpredictable, generating sufficient returns within two weeks to repay a loan, however small, is a formidable challenge. This short window puts immense pressure on borrowers, often forcing them into desperate measures to avoid default.

Thirdly, a mandatory five percent deduction is made from each loan for savings before the money is disbursed. While the intention behind this “savings component” is to foster financial discipline and provide a long-term safety net (with a government match for pension savings), in practice, it further reduces the already meager loan amount available to the borrower. For someone borrowing Sh500, only Sh475 is actually received, diminishing its utility for immediate business needs. This deduction, coupled with the small loan size, makes it even harder for borrowers to generate enough income to repay the principal.

Finally, the report highlights a critical mechanism that inadvertently locks borrowers into a debt cycle: to qualify for slightly higher loan amounts, borrowers are compelled to continuously borrow and repay. This creates an unsustainable pattern where low-income Kenyans are forced to take out new loans to service old ones, rather than using the credit to build sustainable businesses. This constant need to “re-borrow” to improve one’s credit score within the Hustler Fund system can be a treadmill, pushing individuals deeper into financial distress rather than liberating them from it.

Financial Unsustainability: “Quick Money, Dead Money”

Beyond its structural flaws, the KHRC’s report presents a stark picture of the Hustler Fund’s economic unsustainability, describing it as a “loss-making scheme disguised as progress.”

By September 2024, the Fund had disbursed over Sh53 billion. However, the study’s analysis of its performance metrics reveals alarming figures. The default rate stood at a staggering 68.3 percent by the end of 2022. This means that for every Sh500 disbursed, approximately Sh340 is effectively lost due to non-repayment. This high default rate significantly erodes the Fund’s capital and raises serious questions about its long-term viability.

The report further calculates the total estimated cost to the taxpayer. When the 68.3% default rate is combined with the average Treasury bill rate of 8.2 percent (as of December 2022) – representing the opportunity cost of government funds – and the three percent operational cost prescribed by law, the total estimated cost to the taxpayer reaches a staggering 71.5 percent. This means that for every shilling invested in the Hustler Fund, the taxpayer is losing a substantial portion, making it an incredibly inefficient use of public resources.

“This is not financial empowerment. It is a loss-making scheme disguised as progress,” the KHRC asserts in its report. The stark conclusion: “Quick money has become dead money.” This phrase encapsulates the report’s central argument that the Fund, rather than stimulating economic activity, is primarily draining public coffers without yielding tangible benefits for its intended beneficiaries.

Governance Failures and Lack of Transparency

The KHRC report also shines a harsh light on significant governance failures and a pervasive lack of transparency surrounding the Hustler Fund’s operations. These issues raise serious concerns about accountability and the proper management of public funds.

A critical finding highlighted by the report is the Office of the Auditor General’s (OAG) inability to conduct a full audit of the Fund due to missing documentation and unsupported transactions. The OAG, mandated by Article 229(6) of the Constitution of Kenya to audit and report on the use and management of public resources, relies on comprehensive records to verify the lawful and effective application of public money. The absence of such documentation for a fund of this magnitude is a serious breach of public financial management principles and raises red flags about potential mismanagement or irregularities.

Furthermore, the Fund was controversially launched without an oversight board, a clear violation of legal requirements. It was only after public outcry and subsequent litigation that the government moved to appoint one. The absence of an independent oversight body from the outset allowed the Fund to operate with minimal checks and balances, potentially contributing to the very governance issues now being flagged.

The report also points to a persistent lack of transparency in several key areas:

• Loan allocation criteria: The precise methodology for determining individual loan limits and who qualifies for larger amounts remains opaque.
• Regional disbursement data: There’s a lack of clear, publicly available data on how funds are distributed across different regions, making it difficult to assess equitable access or targeted impact.
• Performance tracking: Beyond headline disbursement figures, the actual impact on borrowers’ livelihoods, business growth, and job creation remains largely unmeasured and untracked.

This opacity not only hinders independent oversight but also undermines public trust in the initiative.

Political Manipulation: A Tool, Not a Solution

Perhaps the most damning accusation leveled by the KHRC is that the Hustler Fund has devolved into a political tool rather than a genuine financial solution. The report contends that the Fund’s rollout was primarily driven by the need to fulfill campaign promises made during the 2022 elections, rather than a meticulously planned strategy to address fundamental economic needs.

This political expediency, the KHRC argues, has had a corrosive effect on the Fund’s credibility and the repayment discipline of its beneficiaries. “There is a growing perception that the Fund is a political reward for voting, and therefore repayment is optional,” the report warns. This perception, if widespread, poses an existential threat to the Fund’s financial model, as it encourages default and undermines the very principle of revolving credit. It also erodes the broader culture of public accountability and responsible borrowing.

The “bottom-up economic transformation agenda” (BETA) of the Kenya Kwanza regime, which the Hustler Fund was meant to champion, emphasizes investing capital at the “bottom of the pyramid” to create jobs and reduce the cost of living. However, the KHRC’s findings suggest that the Fund’s design flaws and political undertones are actively hindering, rather than facilitating, this transformation. The report implies that the focus on quick, small disbursements for political mileage overshadowed the need for robust financial literacy, business development support, and a realistic understanding of the target demographic’s financial realities.

Broader Implications: Microfinance, Financial Inclusion, and Public Trust

The KHRC’s report on the Hustler Fund has significant implications for Kenya’s broader microfinance sector, financial inclusion efforts, and public trust in government-led development initiatives.

Kenya has long been a global leader in financial inclusion, largely driven by the widespread adoption of mobile money platforms like M-Pesa. The 2024 FinAccess household survey indicated a slight increase in financial inclusion to 84.8%, but also highlighted critical concerns about financial health, with only 18.3% of adults deemed financially healthy. The survey also revealed a decline in savings rates and an increase in debt stress, with 16.7% of borrowers defaulting on loans in 2024. These trends suggest that while access to financial services has expanded, the quality and impact of these services on actual financial well-being remain a challenge. The Hustler Fund, rather than improving financial health, appears to be exacerbating debt stress for a segment of its borrowers.

The microfinance sector in Kenya faces its own set of challenges, including high non-performing loans (NPLs), limited access to capital for Microfinance Institutions (MFIs), and the need for improved governance and risk management. The Hustler Fund’s high default rate and governance issues reflect some of these broader systemic vulnerabilities, albeit on a much larger, government-backed scale. Responsible lending practices, which emphasize thorough credit assessment, appropriate loan sizing, and realistic repayment terms, are crucial for the sustainability of any microfinance initiative. The KHRC report suggests that the Hustler Fund neglected these fundamental principles in its design and implementation.

The role of civil society organizations (CSOs) like the Kenya Human Rights Commission in holding government accountable is paramount in a democratic society. Founded in 1992, the KHRC’s mandate is to protect and promote human rights in Kenya through monitoring, documenting, and publicizing rights violations. Their “Failing the Hustlers” report exemplifies this watchdog role, providing an independent, critical assessment of a major government program and advocating for policy change based on evidence. Such reports are vital for fostering transparency and ensuring that public resources are used effectively and equitably.

The report also carries significant political ramifications for the Kenya Kwanza regime. The Hustler Fund was a central plank of its economic platform, symbolizing its commitment to the “common mwananchi” (citizen). The KHRC’s call for its shutdown, coupled with the detailed evidence of its failures, could erode public confidence in the government’s ability to deliver on its economic promises. It forces a difficult conversation about the efficacy of populist policies versus sustainable, well-designed interventions.

Beyond Reform: The Call for Shutdown

The KHRC’s report goes beyond merely suggesting reforms; it unequivocally calls for the complete scrapping of the Hustler Fund. The Commission contends that attempts to “reform” the Fund would be futile because its flaws are not superficial technical glitches but are deeply embedded in its design, political underpinnings, and legal framework.

“The evidence leads to a singular and inescapable conclusion that the Hustler Fund has failed and should be scrapped,” the report states. This strong recommendation suggests that the fundamental principles upon which the Fund was built are inherently flawed, making any piecemeal adjustments ineffective. The KHRC believes that a fresh approach, grounded in sound economic principles, robust governance, and genuine financial inclusion strategies, is necessary to truly empower low-income Kenyans.

The report implicitly calls for a re-evaluation of the entire “bottom-up” economic model, urging the government to prioritize sustainable, evidence-based interventions that genuinely address poverty and inequality, rather than politically motivated schemes that risk exacerbating financial distress.

Conclusion: A Critical Juncture for Kenya’s Economic Future

The Kenya Human Rights Commission’s damning report on the Hustler Fund marks a critical juncture for Kenya’s economic policy and its commitment to inclusive growth. By exposing the Fund’s structural weaknesses, financial unsustainability, governance failures, and political manipulation, the KHRC has ignited a vital debate about the efficacy of government-led financial empowerment initiatives.

The call for the Fund’s immediate shutdown is a bold challenge to the Kenya Kwanza administration, urging it to acknowledge the program’s shortcomings and pivot towards more robust, transparent, and genuinely impactful strategies for financial inclusion. As Kenya strives to achieve its Vision 2030 goals of becoming a middle-income country, the lessons from the Hustler Fund’s alleged failures will be crucial in shaping future economic policies and ensuring that public resources are deployed effectively for the benefit of all citizens. The coming days will reveal how the government responds to this significant report and whether it is prepared to heed the call for a fundamental 

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photo source: Google

By: Montel Kamau

Serrari Financial Analyst

5th August, 2025