In the latest budget amendments, the National Treasury reduced the Hustler Fund budget by nearly half to Sh5 billion, indicating a significant reduction in the disbursement of cheap government loans.
This is in addition to the Sh10 billion set aside in June by Treasury Cabinet Secretary Njuguna Ndung’u for the Hustler Fund, officially known as the Financial Inclusion Fund, for fiscal year 2023/24.
The fund, which was one of President William Ruto’s election promises, received Sh20 billion in the previous fiscal year that ended in June.
The budget cut came at a time Dr Ruto launched new product lines, including the Hustler Fund for groups which seek to provide cash mainly to informal traders who must register as a group to qualify for the loans.
“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.
The budget cut comes after a turbulent period marked by defaults on microloans taken out by individuals and small and medium-sized businesses.
The default rate in August was 29%, higher than that of commercial banks, saccos, and microfinance banks, reflecting the difficulties mobile lenders face when extending unsecured loans to the informal sector.
