Government addresses concerns over forceful Hustler Fund loan recovery

The government is considering accessing M-Pesa accounts of defaulters in an effort to recover money borrowed from the Hustler Fund.

Hustler Fund acting CEO Elizabeth Nkukuu told the National Assembly’s Special Funds Account Committee that despite repeated reminders, the borrowers have still not repaid the loan.

Nkukuu revealed that most of the borrowers who haven’t repaid the loan are financially capable and could do so, as their accounts show an average transaction of Ksh.21,000.

“We have the phone numbers and the unique identifiers of the defaulters. They are people of means, people who just don’t want to repay,” she said.

According to records, 13 million Kenyans have defaulted on their loans, and the government is now considering taking drastic measures, including accessing the M-Pesa accounts of defaulters and deducting airtime to recover the Sh7 billion owed.

Members of the committee led by Migori Woman Representative Fatuma Mohammed scrutinised the fund’s management and the fact that the disbursed billions were not insured. The committee has directed fund officials to submit detailed information on the 13 million defaulters within two weeks.

An audit conducted by Auditor General Nancy Gathungu revealed several irregularities, such as loans given to individuals who were not registered. The fund’s policy state that only registered customers are allowed to borrow money. 1,304 individuals who were not registered received loans amounting to Sh1.7 million. The audit also found cases where the same loan identity numbers were used to obtain multiple loans.

The Ministry of Cooperatives and Micro, Small and Medium Enterprises (MSMEs) Development Principal Secretary Susan Mang’eni stated that any efforts to recover defaulted loans will strictly follow national data protection laws, emphasising that service providers’ involvement is solely technological and does not extend to managing customers’ financial information.

“The default recovery measures under consideration will be in line with the laws of Kenya and particularly in strict adherence to data protection laws. The Hustler Fund Service providers partners’ role remain provision of technology,” she clarified.

She assured Kenyans that the government remains committed to upholding data protection laws.

“We assure Kenyans that any measures taken to recover defaulted loans will strictly comply with legal regulations,” she added.

The Data Protection Act prohibits unrestricted access to personal data except in cases of national security or public interest.

Mrs Mang’eni further noted that loans worth more than Ksh 57.8 billion have been disbursed and Ksh 45.5 billion of this has been paid back.

She encouraged borrowers to pay back their loans on time to improve their credit scores, which will allow them to borrow larger amounts of money in the future.

 “We encourage Kenyans to repay their loans on time to build their individual credit score for higher loan limit access. We remain dedicated in ensuring that the Fund grows and deepens financial inclusion at the Bottom of Economic pyramid,” she stated.