Thousands of Kenyans who depend on the Hustler Fund for small business loans have been locked out of borrowing after the programme ran into a Sh5 billion liquidity shortage, raising fresh concerns over its sustainability and future operations.
The shortage was disclosed on Thursday, May 21, 2026, during a meeting of the Parliamentary Committee on Trade, Industry and Investment chaired by Bernard Shinali while lawmakers reviewed budget estimates for the State Department responsible for Micro, Small and Medium Enterprises.
Officials from the department told the committee that although the fund has disbursed billions of shillings since its launch and reached millions of small-scale entrepreneurs, it is now unable to meet demand from existing borrowers, especially those seeking bridge loans.
“The Principal Secretary also informed lawmakers that the Hustler Fund requires enhanced financial and institutional support to maintain liquidity, expand access to affordable credit and support the transition of beneficiaries into the formal financial sector.
The committee was told that the fund currently requires an additional Sh5 billion to address liquidity challenges affecting clients who have already opted into the programme but are unable to access borrowing facilities, particularly under the bridge loan product,” read the post in part.
The Hustler Fund, introduced in late 2022, was designed as a major financial inclusion tool targeting boda boda riders, mama mbogas, kiosk owners and young entrepreneurs who often rely on expensive informal lenders. It was presented as an affordable credit alternative aimed at supporting low-income earners to grow small businesses.
At launch, the government committed Sh50 billion to the programme, including an initial Sh20 billion injection in the first year. However, allocations have reduced steadily over time.
Funding dropped to Sh5 billion in the 2023/24 financial year, then further to Sh2 billion in 2024/25. In the current financial year, the allocation reduced to Sh300 million, while no funding has been proposed for the 2026/27 financial year.
By June 2025, only Sh14.8 billion had been released against the original Sh50 billion pledge, highlighting a significant gap between policy promises and actual disbursement.
Treasury officials told the committee that the fund was meant to operate as a revolving facility, sustained through loan repayments rather than continuous government funding. However, legislators raised concerns that repeated reliance on fresh injections from the Exchequer undermines the idea of self-sustainability.
The liquidity shortage has now left many borrowers unable to access credit even after meeting eligibility requirements and registering under the programme. The situation has particularly affected those applying for bridge loans meant to support short-term business needs.
The crisis comes at a time when small businesses are already under pressure from high living costs, rising fuel prices and heavy taxation, factors lawmakers said could be affecting repayment levels and overall fund performance.
During the same sitting, MPs urged the government to strengthen financial literacy programmes before expanding other MSME funding initiatives, warning that lack of training could weaken the impact of public credit schemes.
Lawmakers also scrutinised the NYOTA Programme, which has already disbursed Sh2.28 billion in startup support to youth enterprises. The State Department is now seeking an additional Sh11.3 billion to enroll 121,800 more beneficiaries.
Unlike the Hustler Fund, which focuses mainly on direct lending, the NYOTA Programme combines skills development with enterprise support and is partly funded by the World Bank.
MPs warned that without adequate financial education, many young entrepreneurs risk mismanaging funds and falling back into dependency instead of building sustainable businesses.
The developments suggest a gradual shift in government focus from mass lending programmes to more structured, donor-supported enterprise initiatives.
For President William Ruto, the Hustler Fund was a central promise during the 2022 campaign, positioned as a tool to uplift ordinary Kenyans locked out of formal credit systems.
However, with shrinking allocations and rising pressure on liquidity, questions are now growing over whether the programme can sustain its original promise or if it is slowly being scaled back within the national budget framework.