The Hustler Fund management has come out to clarify concerns over Sh8 billion that was flagged by the Auditor General as unaccounted for in the financial year ending June 2023, asserting that no such funds were improperly drawn from the National Treasury.
According to the Fund, the money in question, earmarked as counterpart funding for matching long-term savings, remained untouched as the associated savings product was still under development at the time.
In a statement addressing the issue, the Hustler Fund explained, “Contrary to reports appearing in some media, the Sh8 billion in question, which had been allocated as counterpart funding to match the long-term savings of the Hustler Fund, was NOT drawn down from the National Treasury.”
The Fund further indicated that it would have been irresponsible to release the money only for it to remain idle in commercial banks.
The Fund confirmed that by June 30, 2023, the period covered by the audit, it was merely seven months into operations, and the savings product had not been finalised.
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It noted that the development of the product was eventually completed, enabling the first matching of savings during its first anniversary on November 30, 2023.
The management of the Hustler Fund also acknowledged the scrutiny by Parliament, stating, “We note that the Parliamentary Public Accounts Committee has given us two weeks to provide additional information. We assure the public that we will provide the requested documentation.”
Meanwhile, the Fund reported that it has disbursed Sh71 billion so far to over 26 million Kenyans through various loan products. In addition, it has mobilised nearly Sh4.8 billion in both voluntary and mandatory savings.
The Fund highlighted that its credit visibility initiatives have led to the creation of a nine-band behavioural credit rating system, with over 4.5 million of the 9 million repeat borrowers attaining A or B grades, signifying strong creditworthiness.
The concerns arose following a report by Auditor General Nancy Gathungu, who flagged Sh8 billion allocated to the Hustler Fund as unaccounted for, despite the National Treasury disbursing the amount to the State Department for Cooperatives Development during the financial year under review.
The report indicated that the department had spent Sh14 billion against an approved budget of Sh22.96 billion, resulting in an under-absorption of Sh8.2 billion, equivalent to 36 per cent of the allocation.
During a session before the National Assembly Public Accounts Committee, Principal Secretary for Cooperatives, Patrick Kilemi, attributed the under-absorption to procedural gaps.
“The department made a request for the transfer of Sh12 billion to the Hustler Fund which were processed and transferred but no request was made for processing the balance of the final batch of Sh8 billion, thus an under-absorption,” Kilemi stated.
“In this case, the Sh8 billion may not have been requested through the proper channels, and that is why it did not come through.”
Committee members questioned the explanation, with Butere MP Tindi Mwale remarking, “You cannot pass the buck by saying there was failure to submit a request. Procedure demands that once the documentation gets to your office, you sign it off before it goes to Treasury.”
Funyula MP Dr Wilberforce Oundo also sought clarity on whether an executive order had been issued to reallocate the funds to the State Department of SMEs, under which the Hustler Fund now falls.
“Could you tell us, was there an executive order that transferred the money from the State Department of Cooperative to the State Department of SMEs and when was that executive order issued?” Oundo posed.
Kilemi maintained that final accountability lay with the State Department for MSMEs, which oversees the Hustler Fund, noting that the department should provide a detailed account and reconciliation of the funds.
The Hustler Fund’s management now awaits the opportunity to present the necessary documents to Parliament as it seeks to address the concerns raised.
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