Audit uncovers Ksh. 31M Hustler Fund loans to "unborn", underage customers

The audit report for the National Government Funds for the fiscal year 2023/2024 revealed that loans amounting to over Kshs. 31 million were disbursed to individuals registered as underage or, shockingly, unborn.

The report found that 253,717 customers had birthdates between July 1, 2024, and December 31, 2073—dates that lie in the future. 

Of these, 42,981 so-called "unborn" individuals had already received loans totaling Kshs. 31,135,690 through mobile service providers Safaricom, Airtel, and Telkom. 

Safaricom users accounted for the largest share, receiving Kshs. 24,588,216, while Airtel and Telkom users received Kshs. 6,260,874 and Kshs. 286,600, respectively.

In addition to the unborn beneficiaries, the audit identified loans disbursed to individuals under the legal age of 18. 

Specifically, 1,377 underage customers—some as young as 10 days old—were listed, with 1,186 of them already accessing loans amounting to Kshs. 681,395. 

Under Kenyan law, contracts entered into with minors are generally considered voidable, potentially making these loan agreements unenforceable and exposing the fund to significant financial losses.

The audit also highlighted critical operational weaknesses in the Hustler Fund’s framework. 

It criticized the fund’s heavy reliance on mobile service providers for loan disbursement, repayment, and records management. 

"The Fund does not have control of the loans management, including disbursements, repayments, withdrawal of savings, and maintenance of records of the outstanding loans," the report stated. "The Fund relies heavily on the systems and data processed by the service providers. This exposes the Fund to operational, financial, and data integrity issues."

The Hustler Fund was established in November 2022 with the goal of assisting entrepreneurs in gaining access to investment opportunities.

The fund is accessible via the USSD code *254# and mobile application platforms provided by any of Kenya's mobile network operators, with no processing fee.

Under personal finance, a borrower can currently access between Ksh.500 and Ksh.50,000.

Their qualification will grow by borrowing more and repaying within the allowed time of 14 days. The applicable interest rate is 8 percent per annum, calculated per day.

This means that if a borrower borrows Ksh.1,000, they will be charged interest of Ksh.3.60 should they repay on the 14th day. That comes to Ksh.153 interest for a loan of Ksh.50,000 that must be repaid in two weeks.