Farmers are increasingly turning away from the Hustler Fund as a source of credit, even as borrowing for farming activities continues to rise, according to a Central Bank of Kenya survey that points to a shift in preferred lending options.
The findings show the use of the State-backed loan scheme dropped to four percent in January 2026, down from 20 percent in November 2024 and 10.3 percent in July 2023. At the same time, more farmers reported relying on other sources of financing to support production needs.
Launched in 2022, the Financial Inclusion Fund, commonly known as the Hustler Fund, was designed to provide affordable loans ranging from Sh100 to Sh50,000 to support small businesses and informal sector workers. It was intended to ease access to quick credit for daily operations such as buying inputs and paying labour.
However, the survey shows a clear rise in alternative borrowing channels. Loans from friends and relatives increased to 42 percent in January 2026 from 25 percent in November 2025, while digital borrowing rose to 26 percent from 23 percent over the same period.
Bank lending to farmers also recorded an increase, with 33 percent accessing bank loans in January 2026 compared to 30 percent in November 2025. This growth has been linked to lower lending rates following monetary policy easing by the Central Bank, making commercial credit more accessible.
In contrast, borrowing from Savings and Credit Co-operatives declined, dropping to 18 percent from 30 percent within the same period.
Despite the reduced reliance on the Hustler Fund, overall borrowing among farmers rose to 48 percent in January 2026 from 37 percent in November 2025, showing increased credit demand in the sector.
Most of the loans were used to support farming operations. Farmers borrowing to purchase inputs rose to 84 percent from 73 percent, while those using credit for labour costs increased to 75 percent from 47 percent.
The survey was conducted between January 19 and 23, 2026, and sampled 320 respondents made up of farmers, retailers and wholesalers.
The Hustler Fund offers loans at interest rates of up to eight percent per year, with repayment required within 14 days. Late repayment attracts higher charges of 9.5 percent, with accounts frozen after 30 days, conditions that may be discouraging uptake.
Since its launch, the scheme has disbursed Sh83 billion as of March 2026. Out of this, Sh71 billion has been repaid, while Sh12 billion remains in default. The default rate, which once reached 78 percent in 2024, has since dropped to 15 percent.
“Borrowing from friends and family was reported by 42 percent of sampled farmers in January 2026 compared to 25 percent in November 2025, while the proportion of those who reported having accessed digital loans increased further to 26 percent compared to 23 percent in November 2025,” says the survey.
The fund was introduced to improve access to affordable credit for low-income earners, but repayment terms and past defaults continue to influence how borrowers engage with it.
In September 2025, Co-operatives and MSMEs Development Cabinet Secretary Wycliffe Oparanya said defaulters risk being barred from accessing loans from banks and other financial institutions.
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