The government is considering writing off Sh6 billion in defaulted Hustler Fund loans after 10 million Kenyans borrowed small amounts and failed to repay, Principal Secretary for Micro, Small and Medium Enterprises Development, Susan Mang’eni, has said.

Appearing before the National Assembly’s Departmental Committee on Trade, Industry and Cooperatives, Mang’eni disclosed that the defaults came from borrowers who accessed amounts as little as Sh500, mostly between November and December 2022.

“Repayment rate for personal loans is at 80 per cent. However, we had at least 10 million Kenyans who borrowed as low as Sh500 either once or twice and they did not pay. The money at risk here is about Sh6 billion,” she said.

"They never repaid, and that is what we will be seeking to write off, so the portfolio that is totally at risk and is in default is about between Sh5 billion and Sh6 billion."

Mang’eni revealed that Sh65.7 billion has been disbursed under the fund so far, with repayments standing at Sh53.2 billion.

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Those who defaulted, she said, have been blacklisted from further borrowing.

“Those people who have not paid have been graded as bad borrowers and are not eligible to take loans at the moment,” she told the committee.

Defending the fund’s performance, the PS noted that nine million Kenyans are actively borrowing and repaying, and called on MPs to approve an additional Sh5 billion for the next financial year to accommodate demand and support good borrowers.

“Those who are doing better — we need to enhance their limit. And the moment you enhance someone's limit from Sh500 to Sh10,000, you have to fund, and that is why we are asking for additional funding — to fund the 4.5 million who will be graduating to the bridge and at the same time take care of the new applicants who are onboarding Hustler Fund every day,” Mang’eni said.

She also stated that 4.9 million Kenyans have undergone means testing and qualify for insurance premium financing, with further plans to integrate housing finance into the fund.

“We are integrating insurance premium financing products on the Hustler Fund platform to give our beneficiaries an opportunity to borrow for annualised SHA premiums within their current limits towards realising access to universal healthcare,” she explained.

"We are also in discussion with the Housing State department towards co-creating a product for affordable housing to unlock home ownership opportunities for good borrowers."

Mang’eni added that the ministry is contemplating legal reforms to facilitate the forceful recovery of unpaid loans.