President William Ruto's administration has staked its legacy on empowering Kenya's small and medium-sized enterprises (MSMEs), deploying billions of shillings through its signature Hustler Fund and expanded credit guarantee schemes. The goal is simple: unlock affordable credit for the millions locked out of traditional banking.

Three years since the Hustler Fund's launch, the numbers are staggering. The digital lending program has disbursed over KES 80 billion to more than seven million Kenyans, fundamentally altering the micro-credit landscape. This initiative, a core pillar of the Bottom-Up Economic Transformation Agenda (BETA), aims to move public investment from consumption to production.

A Two-Pronged Attack on Pricey Credit

The government's strategy is twofold. First, the Hustler Fund provides direct, easily accessible mobile loans. Launched in November 2022, it offers personal loans starting from KES 500 up to KES 50,000. To encourage growth and good financial behaviour, new products have been introduced. The 'Bridge Loan' allows borrowers with a good repayment history to access up to KES 150,000. According to the State Department for MSME Development, about 800,000 entrepreneurs have qualified for these higher limits.

Second, the government is aggressively expanding the state-backed Credit Guarantee Scheme (CGS). This separate program de-risks lending by commercial banks to MSMEs that lack traditional collateral. The National Treasury plans to expand the CGS to facilitate up to KES 50 billion in commercial bank lending to over 200,000 enterprises. Under this scheme, the government absorbs a portion of the loss if a business defaults, encouraging banks to lend at more favourable rates.

Cracks in the Foundation?

Despite the massive disbursements, significant challenges threaten the long-term success of these programs. High default rates are a primary concern. A report from the Kenya Human Rights Commission (KHRC) labelled the Hustler Fund as "structurally flawed," citing a default rate of 68.3 percent. While the government contests this figure, placing it closer to 20%, it acknowledges that a write-off of up to KES 6 billion from early defaulters is being considered.

Critics also point to the loan sizes and terms as potential pitfalls. Initial loans are often too small to start or meaningfully scale a business, and the short repayment periods can force borrowers into cycles of debt. Further questions have been raised about the fund's effectiveness, with a 2025 Economic Survey revealing that the wealthiest Kenyans have been the most enthusiastic borrowers, undermining the program's pro-poor objective.

Key statistics paint a mixed picture:

• Total Disbursed (Hustler Fund): Over KES 80 billion.
• Total Borrowers: Over 23 million Kenyans have borrowed from the fund.
• Repeat Borrowers: More than 7 million Kenyans are repeat borrowers.
• Default Concerns: Reports indicate default rates ranging from 20% to over 50%, with billions at risk.
• Credit Guarantee Scheme: Aims to unlock KES 50 billion in commercial lending, though uptake has been sluggish since its 2020 launch.

The Road Ahead

The Ruto administration remains resolute. Government Spokesperson Isaac Mwaura recently stated the reforms are working, transforming livelihoods and creating jobs. The focus is on scaling up the Hustler Fund and expanding the CGS to reach more entrepreneurs. However, as MSME Principal Secretary Susan Mang'eni noted, the schemes must be made more impactful, with simplified processes and increased awareness to ensure they reach every corner of the country. The ultimate verdict on whether these initiatives will build a sustainable foundation for Kenya's 'hustlers' or become a cautionary tale of public finance remains to be written.