No funds lost at Hustler Fund, we can account for every coin - CS Chelugui

Cooperatives and MSMEs Cabinet Secretary Simon Chelugui now says no funds have so far been lost from President William Ruto's flagship financial credit fund, the Hustler Fund.

The remarks come after Auditor General Dr. Nancy Gathungu flagged inconsistencies and a perceived lack of transparency and accountability in the government's implementation and management of the credit fund.

Speaking on Citizen TV's ‘The Explainer’ show on Tuesday, Chelugui addressed concerns raised by the Auditor General, emphasising that the integrity of the Hustler Fund remains intact.

He pointed out initial concerns raised by the Auditor General in a letter issued in June 2023, stressing that all the issues have been thoroughly addressed and clarified.

"As we speak, the fund is safe and sound and secure and we can account for every shilling. No funds have been lost and whatever management issues raised by the Auditor General have since then been addressed corrected and aligned," said Chelugui.

"The Auditor General gave us a management letter raising a number of issues. That was in June 2023; we went through those questions, we clarified those issues. The only challenge that we faced was delay in submission of that report because we were very low on staff but since then we have addressed all those issues and we are waiting for the Auditor General to come back and verify the system."

The CS added that the Hustler Fund has been instrumental in rehabilitating 8 million Kenyans previously listed with Credit Reference Bureaus (CRBs).

"Hustler Fund was a government intervention to address market failure. Remember we had so many digital lending organisations that were charging exorbitant rates. Hustler Fund is an initiative to correct that," he said.

"As I speak today; we have done very wonderful. We have been able to rehabilitate 8 million Kenyans who are listed with CRBs and to date we have onboarded over 23 million Kenyans, where 18 million have borrowed."

The Auditor General's report attributed the issues at Hustler Fund to errors in data extraction, understaffing within the Secretariat during the fund's establishment, and errors in notes numbering.

Dr. Gathungu issued a disclaimer opinion, citing inconsistencies in the management of the fund.

She highlighted that the Hustler Fund management failed to provide financial statements for audit review, which prevented verification of the source and authenticity of the balances.

This omission underscored significant shortcomings in the fund's transparency and accountability measures.

In her detailed report, the Auditor General pointed to doubts surrounding the recovery process from exchange transactions.

Her analysis revealed that 17,855,858 beneficiaries applied for loans, amounting to a total disbursement of Ksh.32,015,962,276.

However, a substantial balance of Ksh.10,950,075,614 remained unpaid as of June 2023, including interest receivable and loans outstanding.

Dr. Gathungu also conducted a review of balances across multiple bank accounts and mobile network operators linked to the fund.

She found that Ksh.259,026,553 held by service providers could not be confirmed due to inadequate documentation provided by the fund's management.

Additionally, the Auditor General noted discrepancies in the disclosure of bank account signatories and their specimen signatures, which were essential for the audit review process.

These lapses further compounded the challenges in validating the financial activities of the Hustler Fund.

Further scrutiny 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, surpassing the initial limit by Ksh.219,615,242.

Among these recipients were 5,070 individuals who were ineligible for loans under the fund's guidelines.

The report also detailed instances where 11,213 borrowers received additional loans totaling Ksh.161,931,703 before fully repaying their previous obligations.

Furthermore, Dr. Gathungu flagged 129,315 closed accounts holding Ksh.81,622,289, where loan repayments could not be traced, indicating inadequate tracking and accountability measures.

Additionally, the Auditor General identified 867 instances of duplicate loan identity numbers, which processed 1,978 loans amounting to Ksh.477,928.