The Hustler Fund, a flagship micro-lending initiative launched in November 2022 by President William Ruto, has spiraled into controversy, with Safaricom’s role in the repayment process raising serious ethical concerns.
Safaricom, through its dominant M-Pesa platform, has been enlisted to enforce loan recoveries from defaulters, a move that critics argue amounts to state-enabled financial exploitation and privacy violations.
With 19 million of the 21 million borrowers defaulting as of October 2023, the fund faces a repayment crisis, leaving an unpaid balance of over KSh 10 billion and exposing massive flaws in its design and execution.
Despite its stated purpose of supporting small businesses, 70% of borrowers used the loans for household expenses, undermining the fund’s intent.
This misalignment reflects the harsh economic realities faced by low-income Kenyans and points to a failure in borrower education and targeting mechanisms.
To address the repayment shortfall, the government plans to deduct outstanding amounts directly from borrowers’ M-Pesa accounts and airtime balances.
Acting Hustler Fund CEO Elizabeth Nkukuu claimed that many defaulters are capable of repaying but have chosen not to, justifying the use of Safaricom’s infrastructure for forced recoveries.
The reliance on Safaricom for this process has drawn parallels to earlier allegations of the telecom giant facilitating intrusive state surveillance.
Safaricom CEO Peter Ndegwa has previously faced accusations of enabling government access to user data without adequate safeguards.
By leveraging its extensive mobile money ecosystem for debt collection, the company is accused of further entrenching itself in contentious government programs, sparking outrage over potential breaches of consumer rights and privacy.
Operational inefficiencies and alleged mismanagement have compounded the Hustler Fund’s troubles.
An audit revealed instances of duplicate loan identities and disbursement to unregistered individuals, raising doubts about the integrity of its processes.
Furthermore, the fund lacks insurance for disbursed loans, leaving it vulnerable to financial instability.
Lawmakers have increasingly called for the fund’s dissolution, arguing that its structural flaws and failure to meet its objectives outweigh its potential benefits.
This situation has also raised broader concerns about the interplay between public institutions and corporate entities like Safaricom.
Critics argue that Safaricom’s dominant market position enables it to participate in such initiatives without sufficient accountability, leaving ordinary Kenyans exposed to financial exploitation and potential privacy violations.
The Hustler Fund debacle underscores the urgent need for stricter regulatory oversight, transparency in public-private partnerships, and a more robust approach to protecting consumer rights in Kenya.
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