The Kenyan government has announced that it will cancel about 6 billion shillings in loans that nearly 10 million people have not paid back. These loans were given through the Hustler Fund, which started in 2022.
This step is part of the government’s efforts to deal with the major problems that borrowers are facing in paying back their loans.
The Hustler Fund was created by President William Ruto’s government to provide small loans to help people start businesses. It especially aimed to assist young people and women who do not have much money.
However, recent information shows that more than half of the people who borrowed money have not paid it back. This means the fund could lose between 5 billion and 6.3 billion shillings.
Susan Mang’eni, the Principal Secretary, told the National Assembly’s Committee on Trade, Industry, and Cooperatives that the government might write off the loans if they are not able to recover the money from the borrowers.
“We are not ready to write off the loans yet, but we are looking for the people who have not paid,” Mang’eni said, noting the seriousness of the situation.
This has raised concerns among lawmakers, and some are questioning how the fund is being managed.
Critics are saying that the high number of people not paying back their loans shows deeper problems, such as not having strict rules for repayment and that the fund’s interest rates are lower than those of regular banks.
This situation has led to questions about whether the Hustler Fund can continue and its effects on Kenya’s overall financial system.
The government’s decision to think about writing off these loans has also led to discussions about how public money is used and the responsibility of borrowers.
Some lawmakers, like Kajiado South MP Samuel Parashina and Machakos Women Representative Joyce Kemene, have expressed doubts. Parashina suggested that the money from the fund should be used for other projects because of the issues like “conman-ship and theft.”
As Kenya deals with this financial problem, the future of the Hustler Fund is unclear. There are calls for the government to rethink how the fund is set up and run to avoid similar problems in the future.
If the loan write-off happens, it will be a big loss for a program meant to help many Kenyans improve their lives, highlighting the difficulties of running large social and economic programs when there are so many defaults.
