President William Ruto on Friday issued a stern message to Kenyans who have defaulted on loans from the government's Financial Inclusion Fund, popularly known as the Hustler Fund, stating that the primary consequence of non-repayment is self-inflicted economic stagnation. Speaking at the Mumias Sports Complex in Kakamega County on Friday, November 7, 2025, during the launch of the National Youth Opportunities Towards Advancement (NYOTA) Programme, the President argued that defaulters are only denying themselves the opportunity to increase their credit limits and improve their livelihoods.

"There are those who took KSh 500 and disappeared. The loss is yours," President Ruto stated in Swahili. "You would have been borrowing KSh 50,000 by now, but because you took KSh 500, you are struggling with it. Let's be smart." He emphasized that the fund is designed for progressive lending, where consistent repayment of smaller loans builds a credit history that unlocks access to significantly larger sums. However, he assured defaulters they would not be coerced into repayment, urging them to settle their debts at their own pace to rejoin the system.

A Fund Under Scrutiny

Launched on November 30, 2022, the Hustler Fund is a cornerstone of the Kenya Kwanza administration's Bottom-Up Economic Transformation Agenda (BETA), intended to provide affordable credit to millions of Kenyans excluded from the formal financial system. The fund offers personal loans ranging from KSh 500 to KSh 50,000 at an 8% annual interest rate, calculated daily.

Despite the President's focus on personal responsibility, the fund's performance has been a subject of intense debate, with conflicting reports on its success. While the government has often cited high repayment rates, with some official statements claiming rates as high as 80-90%, independent audits and media analyses present a more challenging picture. A report from the Auditor-General earlier in 2025 indicated that the default rate had reached 64%, with KSh 8.74 billion remaining unpaid for over a year as of June 30, 2024. Other reports from late 2024 placed the non-performing loan ratio at over 21%, with more than half of all borrowers having defaulted on repayments totalling KSh 11 billion.

In May 2025, the State Department for Micro, Small, and Medium Enterprises (MSMEs) acknowledged a significant challenge, disclosing that approximately 10 million Kenyans who borrowed small amounts, averaging KSh 500, shortly after the fund's inception never made any repayments. This has put an estimated KSh 6 billion at risk of being written off if recovery efforts fail.

Implications for Kenya's Credit Landscape

The President's stance in Kakamega underscores the government's strategy of using incentive over enforcement for small-scale defaulters, a stark contrast to the aggressive, and often illegal, debt collection tactics employed by many private digital lenders in Kenya. The government's approach is to position the Hustler Fund as a unique opportunity for building a verifiable credit score, which could eventually serve as a bridge to larger loans from commercial banks.

However, the fund's effectiveness in reaching its intended demographic—the so-called "hustlers" at the bottom of the economic pyramid—has been questioned. A 2025 Economic Survey revealed a concerning trend: wealthier, urban Kenyans have been the most active users of the fund. According to the survey, 35.8% of individuals in the highest wealth quintile have borrowed from the fund, compared to only 18.7% in the lowest quintile. This data suggests a structural challenge in the fund's design and outreach, as those who are more digitally and financially literate appear better positioned to capitalize on the program.

The President's remarks were made while launching the NYOTA programme, a World Bank-funded initiative providing grants to youth. He clarified that unlike the Hustler Fund, the NYOTA funds are not loans to be repaid by the beneficiaries, but rather will be settled by the Kenyan government. This distinction highlights the different mechanisms the government is employing for youth empowerment, yet the long-term sustainability of the Hustler Fund, with its high default rate and questions over its target audience, remains a critical issue for Kenya's public finances and its ambitious financial inclusion agenda.