Auma clarified that the government will follow all necessary laws while recovering these unpaid loans. She emphasized that the Hustler Fund operates independently of mobile wallets and banks, noting that these intermediaries merely provide the technology for processing transactions, and they do not own the fund.
Since the Hustler Fund’s launch in 2022, it has disbursed over KSh 57.8 billion to Kenyans, with the aim of providing financial support to small businesses and individual entrepreneurs. However, as of October 2024, more than 13 million Kenyans have defaulted on their loans, leaving the government with an unpaid debt of KSh 7 billion.
While KSh 45.5 billion has been repaid so far, the large number of defaulters has prompted the government to take measures to recover the outstanding loans. Co-operatives and MSME Development Cabinet Secretary (CS) Wycliffe Oparanya shared that the government is exploring options to ensure these funds are recovered in a lawful and transparent manner.
Amid growing concerns, PS Auma assured the public that any loan recovery measures will comply with Kenyan laws, particularly regarding the protection of personal data. She refuted claims that the government would automatically access defaulters' M-Pesa or other financial accounts without proper legal procedures.
"The recovery of the defaulted Hustler Fund loans will be done in strict accordance with the law, including adhering to data protection regulations. We respect the privacy and rights of every Kenyan," Auma stated. She stressed that the government is fully committed to respecting individual privacy, and no unlawful methods will be used to recover the loans.
Auma explained that the Hustler Fund is not part of any financial institution's product portfolio but a government service, with intermediaries such as mobile money services only offering technology support. She added that borrowers belong to the fund, and not to the financial intermediaries providing technology for loan disbursements.
The Principal Secretary urged Kenyans who have taken out loans from the Hustler Fund to make timely repayments to avoid legal complications and to build a good credit history. Timely loan repayment will enable borrowers to access more financial products in the future and improve their overall credit scores.
Auma also called on defaulters to clear their outstanding balances promptly. "It is important for those who have borrowed from the Hustler Fund to honor their obligations and repay the loans on time. This will enable the fund to continue supporting more Kenyans in need of financial assistance," she said.
In August 2024, CS Oparanya hinted at the introduction of a new digital system to monitor Hustler Fund defaulters and track their financial activity. He pointed out that the default rate had reached an alarming level, with more than 19 million borrowers yet to clear their loans. The digital system, Oparanya explained, will be used to keep loanees in check and prevent further defaults while respecting legal guidelines.
The government’s priority is to ensure that the Hustler Fund remains a sustainable initiative for future borrowers. Auma encouraged Kenyans to take advantage of the financial support provided by the fund but also reminded them of their responsibility to repay.
The government's plan to recover defaulted loans aims to balance accountability with fairness, ensuring that the rights of borrowers are protected while addressing the issue of unpaid loans.
0 Comments