In an effort to recover unpaid loans from defaulters, the Hustler Fund is working on a plan to deduct airtime balances from M-Pesa accounts.
This was revealed by Elizabeth Nkukuu, the acting CEO of the Hustler Fund, during a session with the National Assembly’s Special Funds Committee.
Nkukuu disclosed that discussions are underway with Safaricom to facilitate this recovery process for borrowers who have failed to repay their loans.
The government has already identified individuals who defaulted after borrowing from the fund, particularly those who took out loans when the Hustler Fund was launched in November 2022.
Nkukuu noted that many of these borrowers are capable of repaying but have chosen not to.
“It’s not that they cannot pay. They are people who just don’t want to pay,” she stated.
Since its inception, the Hustler Fund has disbursed approximately Sh57.8 billion to 24 million Kenyans. However, only two million borrowers have maintained good credit records.
The fund was created to provide affordable loans to individuals previously excluded from mainstream financial systems, with each loan carrying an 8% interest rate and 5% of the amount retained for savings.
These savings have accumulated to Sh3.5 billion so far.
Nkukuu explained that if voluntary repayments are not made after initial reminders, the government will pursue legal avenues.
Before taking legal action, a “nagging” technique will be used, involving frequent reminders via phone calls, followed by M-Pesa and airtime balance deductions if necessary.
Supporting this initiative, Principal Secretary for Micro, Small, and Medium Enterprises Susan Mang’eni pointed out that defaulters have had nearly two years to repay their loans.
Members of the Parliamentary committee raised concerns about the lack of insurance for the Hustler Fund, questioning how the government can issue loans without safeguards against defaults.
Nkukuu confirmed that the fund is not insured, prompting the decision for more aggressive recovery measures.
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