Investigations
Scandal: Audit Reveals Under Age And Unborn Children Benefited From Hustler Fund Loans
Out of the ‘unborn’ registered customers, 42,981 had been loaned Sh31.1 million.
An audit of the Hustler Fund loans disbursed in the financial year to June 2024 has revealed serious anomalies in the dates of birth of the beneficiaries amid revelations that some of them were either below the legal cut-off age of 18 or had not been born by the time the cash was disbursed.
The review by Auditor General Nancy Gathungu revealed that Sh 31,817,085 Hustler Fund loans were dished out to 44,167 borrowers in the year to June 30, 2024, even though the indicated dates of birth of the recipients showed that they were either underage or unborn at the time.
Auditors found that 253,717 registered customers whose dates of birth ranged between July 1, 2024, and December 2073—way beyond the June 2024 disbursement window—a pointer to possible misrepresentation that led to losses of funds amid concerns of high default rates and the lack of a proper loan management system.
Out of the ‘unborn’ registered customers, 42,981 had been loaned Sh31.1 million.
“Review of the customers and opted-in data sets provided revealed customers who were below the required mandatory age of 18 years and others whose birthdates were in the future after June 30, 2024,” the audit notes.
Auditors also established that 1,377 registered customers of the Hustler Fund were aged between 10 days and 17 years, yet the programme proceeded to loan 1,186 of them some Sh681,395.
“The records are therefore unreliable and the resultant data in the systems may not have adequate controls. In the circumstances, loan agreements with underage individuals are potentially unenforceable and increase the likelihood of default,” Ms Gathungu observes.
Of the three payment service providers contracted to extend Hustler Fund loans to Kenyans, Safaricom had the highest record of registered underage and unborn customers, 244,566.
It was followed by Airtel which had registered 10,128 underage and unborn customers, then Telkom registered 398 of the customers.
The concerns are coming up even as auditors raise an issue with management of the programme, with the government continuing to rely heavily on the three payment service providers for operations.
“The Fund is fully dependent on the service providers’ loan management systems resulting to various challenges that may have been avoided if the Fund had its own loan management systems. Further, Management did not have a credit policy and collection strategy for non-performing loans,” the audit notes.
The observation has been made as a high number of Kenyans who have borrowed from the Hustler Fund default on the loans, casting more doubts on their recoverability.
By June 2024, the government had provided Sh12.8 billion in funding for the loan programme, of which Sh12.4 billion was to be loaned out to Kenyans.
Susan Mang’eni, the Principal Secretary of the Micro, Small, and Medium Enterprises Ministry last year noted that by September 2024, Kenyans had borrowed Sh57 billion through the programme, of which they had defaulted on Sh11 billion.
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