In the most recent budget revisions, the National Treasury has notably slashed the Hustler Fund budget by nearly half, allocating it a total of Ksh.5 billion. This signals a substantial decrease in the provision of government-subsidized loans.
This reduction comes in addition to the initial allocation of Sh10 billion set aside by Treasury Cabinet Secretary Njuguna Ndung’u in June for the fiscal year 2023/24, officially known as the Financial Inclusion Fund, fulfilling one of President William Ruto's election pledges.
For the preceding fiscal year ending in June, the fund had received an allocation of Sh20 billion.
The reduction in budget allocation coincides with Dr. Ruto's introduction of new initiatives, such as the expansion of product offerings, which includes the introduction of the Hustler Fund. This particular fund targets groups, primarily catering to informal traders. To be eligible for these loans, individuals must register as part of a group.
“I think it is just in line with the austerity measures that the government is taking,” said Elizabeth Nkukuu, the Acting CEO of the Hustler Fund, adding that the move might also have been taken to re-balance the portfolio.
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The budget reduction follows a turbulent period characterized by a surge in defaults on microloans acquired by both individuals and small to medium-sized enterprises.
In August, the default rate climbed to 29%, surpassing that of commercial banks, saccos, and microfinance banks. This underscores the challenges faced by mobile lenders in providing unsecured loans to the informal sector.
