The government has responded to Auditor General Dr. Nancy Gathungu’s critical findings on the Financial Inclusion Fund, commonly known as the Hustler Fund, attributing the highlighted issues to errors in data extraction, initial understaffing, and mistakes in note numbering.
Dr. Gathungu issued a disclaimer opinion, pointing out inconsistencies in the fund’s management. She noted that the Hustler Fund Management failed to provide necessary financial statements for audit, preventing the verification of sources and authenticity of balances. This highlighted significant transparency and accountability shortcomings.
In her detailed report, Dr. Gathungu raised concerns about the recovery process from exchange transactions. Her analysis revealed that 17,855,858 beneficiaries had applied for loans totaling 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’s review of balances across various bank accounts and mobile network operators linked to the fund found that Ksh 259,026,553 held by service providers could not be confirmed due to inadequate documentation provided by the fund’s management. She also noted discrepancies in the disclosure of bank account signatories and their specimen signatures, complicating the audit review process.
The report revealed that the fund had 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.
Further scrutiny showed that 11,213 borrowers received additional loans totaling Ksh 161,931,703 before fully repaying their previous obligations. Additionally, 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.
Moreover, the Auditor General identified 867 instances 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 and oversight.
In response to these revelations, the Ministry of Cooperatives and MSMEs acknowledged several challenges during the fund’s inception, including understaffing, errors in note numbering, data extraction issues, and missing data dumps. These factors contributed to the operational hurdles faced by the Hustler Fund, as outlined in Dr. Gathungu’s report.
The findings have cast doubt on the integrity and effectiveness of one of President William Ruto’s flagship projects. Initially heralded as a key initiative, the Hustler Fund is now under scrutiny, with implications that it may evolve into yet another scandal for the administration.
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