The Kenya Human Rights Commission (KHRC) wants the government to scrap the Hustler Fund warning that the initiative is financially unsustainable and fundamentally flawed.
In a report released on Monday titled “Failing the Hustlers,” KHRC argued that the fund, officially known as the Financial Inclusion Fund, has failed to uplift low-income Kenyans as promised. Instead, the rights group accuses the programme of lacking a well-defined framework to empower those at the economic bottom in a sustainable way.
KHRC stated that simply redesigning or reforming the fund will not solve its deep-seated legal, political, and structural issues. The commission insists that abolishing the fund is the only viable option moving forward.
Skyrocketing Default Rates and Budget Cuts
The report notes a worrying pattern of budget cuts: the Treasury cut the Hustler Fund budget to Ksh.300 million in the 2025/26 budget, down from Ksh.5 billion last year, and Ksh.10 billion in 2023/24.
KHRC also cited a 2023 Auditor General’s report showing a 32% default rate, with Ksh.10.9 billion in defaulted loans out of Ksh.32 billion that was disbursed. The rights body now estimates the default rate at a staggering 68%, meaning for every Ksh.500 disbursed, Ksh.340 is lost.
This growing debt burden, KHRC warns, is forcing the government to borrow more, primarily through Treasury bills to keep the programme afloat.
According to the commission, default rates began rising sharply in mid-December 2022, climbing from 40.7% on December 14 to a staggering 68.3% by December 20.
The data also shows that elderly borrowers were the most affected. A staggering 78% of defaulters were aged over 90, while 12% were under 30. Borrowers aged between 30 and 90 years recorded the lowest default rate at just 5%.
KHRC attributes the surge in defaults to the fund’s unrealistic 14-day loan repayment window, which it says sets up vulnerable Kenyans for failure rather than financial empowerment.
“If the government is truly genuine about empowering Kenyans at the bottom of the pyramid, it must go beyond populist headline,” the commission said in its report. “Otherwise, the Hustler Fund is quickly proving to be another politically convenient but economically unsustainable initiative.”
Flawed Design and Lack of Recovery Mechanisms
KHRC also criticized the operational framework of the Hustler Fund, calling it opaque, poorly designed, and financially unsustainable. In its latest report, the rights body points to weak loan application requirements, vague recovery procedures, and an overall lack of transparency in how the fund operates.
The Commission highlighted that borrowers can easily access loans through mobile money platforms without any collateral or stringent eligibility checks. With no clear loan recovery regulations in place, the commission warns the Fund is losing money fast.
“The numbers don’t add up,” KHRC states. “When combined with the cost of operations (estimated at three percent) and the government’s borrowing costs to finance the Fund (8.2 percent).”
The report also criticizes the Fund for failing to cater to the diverse needs of borrowers. KHRC argues that the Hustler Fund doesn’t offer tailored financial products or the necessary support services to promote long-term business success.
“The regulations do not provide a structured financial literacy framework beyond the digital disbursement of funds,” the commission notes.
Political Motives and Damaged Credit Culture
KHRC concludes that without urgent reforms or a complete overhaul, the Hustler Fund risks becoming another wasteful, politically driven programme.
The commission has warned that the Hustler Fund is being misused as a tool for political patronage rather than genuine economic empowerment. In its scathing report, KHRC argues that the fund was designed more to fulfill a campaign promise than to foster long-term self-reliance among low-income Kenyans.
According to the report, the fund’s heavy politicization has damaged its legitimacy and shifted its purpose away from addressing real financial needs.
“Instead, it serves as a post-election reward mechanism and a tool for political messaging,” KHRC states. “The widespread perception that it is a handout, and therefore repayment is optional, has destroyed the credit discipline and financial education needed for sustainable lending.”
The commission also points out that this perception has crippled financial education efforts and made sustainable lending nearly impossible.
Despite the fund’s flaws, the report shows that uptake remains highest in Nairobi, Kiambu, and Nakuru counties, where borrowers continue to rely on the product even as its long-term sustainability remains in question.
