President William Ruto has defended the Hustler Fund against growing criticism, saying those attacking the initiative are out of touch with the struggles of ordinary Kenyans.
Speaking on Wednesday, August 6, Ruto took issue with critics whom he described as elite individuals disconnected from the realities on the ground.
"You know, people who sit in offices that have air conditioning, speaking from Nairobi, in posh hotels, don't think Ksh500 matters to anybody because they don't understand the hustles of small people.
"They don't understand what goes on in real Kenya, down there, where Ksh500 can make somebody earn a living, be able to put food on their table, and be able to go about their businesses," he said.
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Ruto reiterated that the Hustler Fund was designed to provide affordable credit to millions of Kenyans who are often excluded from the formal financial system.
"The Hustler Fund was not supposed to compete with banks, it wasn't meant to replace credit in banks; it was meant to correct a market failure.
"There are people who banks and financial lenders cannot touch, but they exist, they are not included in the financial system and they need support. So we rolled out the Hustler Fund to attend and to include these micro-entrepreneurs," he added.
Ruto's response comes days after the Kenya Human Rights Commission (KHRC) called for the scrapping of the Hustler Fund, terming it a politically driven and economically flawed initiative that has failed to uplift low-income Kenyans as promised.
In a report released on Monday, August 4, the commission concluded that the fund, launched in November 2022 with a Ksh50 billion capital base, has become a financial burden with minimal developmental impact.
KHRC went on to accuse the government of using the fund to fulfill post-election promises rather than addressing structural economic challenges.
"This is not financial empowerment. It is a loss-making scheme disguised as progress. Quick money has become dead money," the report stated.
KHRC further criticized the fund’s design, which deducts five percent from each loan as mandatory savings even before disbursement, reducing the actual usable amount.
The fund’s performance metrics also came under scrutiny; by the end of 2022, KHRC reports a 68.3 percent default rate, noting that for every Ksh500 loan issued, Ksh340 was effectively unrecoverable.
“There is a growing perception that the Fund is a political reward for voting, and therefore repayment is optional. This perception threatens the Fund’s credibility and undermines public accountability," the report added.
According to the report, efforts to reform the fund would be insufficient to address its underlying flaws and so it should be scrapped.
"The evidence leads to a singular and inescapable conclusion that the Hustler Fund has failed and should be scrapped," the report recommended.
