The Auditor-General, Dr. Nancy Gathungu has raised a red flag over the management of President William Ruto’s pet project the Financial Inclusion Fund, popularly known as ‘The Hustler Fund’ citing inconsistencies in the management of the fund.
The Hustler Fund was established in November 2022 by Ruto’s government as an intervention to correct market failure problems and to cushion MSMEs against the high cost of credit.
The Auditor-General also pointed out that the Hustler Fund Management did not provide financial statements for audit review, hindering the verification of the source and authenticity of the balances.
This omission highlighted significant deficiencies in the fund’s transparency and accountability measures.
In her comprehensive report, the Auditor General expressed concerns about the recovery process from exchange transactions.
Her analysis showed that 17,855,858 beneficiaries applied for loans, leading to a total disbursement of Ksh 32,015,962,276. However, as of June 2023, a significant balance of Ksh 10,950,075,614 remained unpaid, including interest receivable and outstanding loans.
Dr. Gathungu also reviewed balances across various bank accounts and mobile network operators associated with the fund. She discovered that Ksh 259,026,553 held by service providers could not be confirmed due to inadequate documentation from the fund’s management.
Additionally, the Auditor General found discrepancies in the disclosure of bank account signatories and their specimen signatures, which were crucial for the audit review process. These issues further complicated the validation of the fund’s financial activities.
Further examination revealed that the fund exceeded its set limits in loan disbursements. Dr. Gathungu identified 238,707 cases where loans totaling Ksh 420,312,323 were issued, exceeding the initial limit by Ksh 219,615,242. Among these recipients were 5,070 individuals who were ineligible for loans according to the fund’s guidelines.
The report also highlighted instances where 11,213 borrowers received additional loans totaling Ksh 161,931,703 before fully repaying their previous obligations. Additionally, Dr. Gathungu noted that 129,315 closed accounts, holding Ksh 81,622,289, had untraceable loan repayments, indicating poor tracking and accountability measures.
Moreover, the Auditor General identified 867 cases of duplicate loan identity numbers, which processed 1,978 loans amounting to Ksh 477,928. This finding underscored systemic deficiencies in the fund’s loan management system configuration and oversight.
In response to these findings, the Ministry of Cooperatives and MSMEs acknowledged several challenges during the fund’s inception. These included understaffing, errors in notes numbering, data extraction issues, missing data dumps, and overall extraction difficulties.
According to the government, these are the factors contributed to the operational challenges faced by the Hustler Fund, as detailed in the Auditor General’s report.
