Govt Breaks Silence on Claims of Missing Ksh8 Billion from Hustler Fund

The government has issued a statement on the Hustler Fund after the Auditor General reported that the State Department of Cooperatives Development cannot account for Ksh8 billion spent in the 2022/23 financial year.

In a statement, Micro, Small, and Medium Enterprises (MSMEs) Principal Secretary Susan Mang’eni said initial capitalization of the Fund was Ksh20.2 billion.

Out of this, Ksh12 billion was allocated towards lending, while Ksh8 billion was allocated as counterpart funding to match the long-term (pension) savings for the Hustler Fund beneficiaries.

According to Mang’eni, an extra Ksh200 million was allocated to support the operationalisation of the Fund.

“Contrary to reports appearing in some media, the Ksh. 8 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,” Mang’eni said.

She explained that by the period under audit review, the Fund was 7 months old, and the matching savings product was still being developed.

Mang’eni explained that it would have been imprudent for the Fund to draw down the money only to idle in the commercial banks.

“We finally finalised the development of the savings product, and we undertook the first matching up during the 1st Anniversary of the Fund on 30th November 2023,” she said.

The PS said the State Department will provide the requested documentation to the Parliamentary Public Accounts Committee within two weeks.

“We want to assure Kenyans that the Fund remains committed to its objective and purpose of deepening financial and credit inclusion among the most vulnerable segments of the economy. We will continue to develop innovative financial products to address credit market failures and unlock access to affordable credit,” she said.

Auditor General Report

The Auditor General said the State Department spent Ksh12 billion against an approved budget of Ksh22.96 billion, resulting in Ksh8.2 billion that the department cannot account for.

Appearing before the National Assembly’s Public Accounts Committee, Principal Secretary (PS) for the State Department for Cooperatives, Patrick Kilemi, acknowledged that Ksh20 billion had indeed been allocated to the Hustler Fund for that financial year.

Kilemi, however, struggled to explain the whereabouts of the Ksh8 billion.

“The State Department requested the transfer of Ksh12 billion to the Hustler Fund, which was processed and transferred. However, no request was made for the remaining Ksh8 billion, hence the under-absorption,” Kilemi told the Committee.

Also Read: Kenyans Who Refused to Pay Hustler Fund Loans to be ‘Forgiven’

PS Kilemi Fails to Explain Missing Hustler Funds Billions

PS Kilemi admitted that he could not fully account for the missing Ksh8 billion.

He cited transitional challenges within government departments during the early days of the Kenya Kwanza administration.

Additionally, Kilemi explained that the State Department for Micro, Small, and Medium Enterprises (MSMEs) was yet to be fully integrated into government financial systems when Kenya Kwanza took over.

Therefore, the State Department for Cooperatives temporarily took charge of initiating the Hustler Fund.

“I was tasked with initiating the Hustler Fund as the State Department for MSMEs was being established. That’s why I received the funds on behalf of that department and now find myself responding to questions about what transpired at the time,” he said.

Also Read: Ruto Triples Hustler Fund Loan Limit