The government is stepping up its efforts to recover outstanding loans from defaulters of the Hustler Fund. In a recent session with the National Assembly’s Special Funds Committee, Elizabeth Nkukuu, the acting CEO of the fund, revealed that discussions are underway with Safaricom to enable deductions from M-Pesa accounts of those who have failed to repay their loans.
Highlights
- The government is targeting defaulters
- They’re looking to recover billions in debt
The Hustler Fund, launched in November 2022, has disbursed approximately Sh57.8 billion to 24 million Kenyans. However, only two million borrowers have maintained good financial credit, prompting the government to take action against defaulters.
Nkukuu emphasized that many of the defaulters have the financial means to repay their loans but have chosen not to do so. She stated, “It’s not that they cannot pay. They are people who just don’t want to pay.”
The fund offers loans at an interest rate of 8%, with 5% retained for savings, which has accumulated to Sh3.5 billion.
To encourage repayment, the government plans to implement a “nagging” technique, involving frequent phone calls and reminders to defaulters. If voluntary repayment is not forthcoming, the government may resort to deductions from M-Pesa accounts and airtime balances.
Principal Secretary for Micro, Small, and Medium Enterprises Susan Mang’eni supported this approach, noting that defaulters have had ample time to repay their loans.
Members of the Parliamentary committee expressed concerns about the lack of insurance for the funds being disbursed. They questioned how the government can issue loans without adequate safeguards against defaults.
The government’s aggressive stance on loan recovery marks a significant shift in its approach to financial inclusion initiatives. This move reflects broader efforts to ensure accountability and fiscal responsibility among borrowers.
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