Government Bars Hustler Fund Defaulters from Accessing Bank and Sacco Loans

The government has announced that individuals who default on Hustler Fund loans will be blocked from borrowing from banks, Saccos, and other financial institutions.

Speaking during the Kenya Public-Private Sector MSMEs Dialogue in Mombasa, Cabinet Secretary for Cooperatives and MSMEs Development, Wycliffe Oparanya, said lenders will now be required to check applicants’ Hustler Fund repayment records before approving new credit.

“Before any bank approves a loan, it will confirm if the borrower has a history with the Hustler Fund and if they honoured the repayment,” he said.

The decision follows rising concerns over loan defaults within the programme, which had recorded defaults amounting to Sh6 billion by May. Since its launch in November 2022, the Hustler Fund has disbursed approximately Sh70 billion to 26 million Kenyans, primarily targeting informal sector participants excluded from conventional banking services.

Mr Oparanya noted that the Fund was created not only to offer affordable loans but also to promote financial discipline. Borrowers with a consistent repayment record may qualify for increased limits of up to Sh150,000. Those who default, however, will face restrictions across the formal credit market.

“For defaulters, access to any form of credit will be denied,” he said.

The policy forms part of broader reforms aimed at strengthening support for Micro, Small and Medium Enterprises (MSMEs), which make up a significant portion of Kenya’s economy. These reforms include the expansion of state-backed financing schemes such as the Uwezo Fund and the Credit Guarantee Scheme, which allows eligible businesses to secure loans of up to Sh10 million with government backing.

In addition, the government is promoting digital financial services to improve efficiency and reduce reliance on cash. Mr Oparanya encouraged the adoption of mobile-based transactions, noting their benefits in reducing queues at banking halls and improving security.

Improved market access is another key focus. In November, Kenya will host the East African MSME Expo, a ten-day event expected to attract 5,000 participants from all 47 counties. Businesses that meet Kenya Bureau of Standards (Kebs) requirements will be eligible to export goods to East African Community member states.