No money was lent irregularly - Hustler Fund

The Fund was responding to the latest audit report that claimed that the country has lost billions in the project.

In Summary
  • The auditor's report shows that unregistered individuals and people who were not qualified for loans were advanced millions of shillings.
  • The Fund has also defended contractual agreements with its partners.

The Financial Inclusion Fund (FIF) has denied that it issued loans to undocumented people, terming the auditor's report as alarming.

In a detailed response to various allegations leveled against the fund by Auditor General Nancy Gathangu, Hustler Fund CEO Elizabeth Nkukuu assured the country that there are concerted efforts to come after defaulters who are still holding billions under President William Ruto's flagship economic stimulus project.

"We concur with audit observation on low recovery rate. The management together with the Financial Inclusion Fund board are working out on recovery mechanisms that will be implemented,'' Nkukuu said in a media statement. 

She adds that "its key for the Fund to ensure high loan recovery at the same time it does not lose the intended purpose of rehabilitation and also enhancing financial inclusion in the country."

The auditor's report shows that unregistered individuals and people who were not qualified for loans were advanced millions of shillings.

It added that some people were also given loans above set limits while others got the loans without National Identity Cards. 

She also demanded answers as to why some borrowers were given multiple loans before repayment of the previous ones while some Kenyans were unable to get any loan. 

On the claim that 424 loans amounting to Sh405,445 had no transaction ID, the Fund says that there could have been an error while extracting the data that distorted the data.

The office has also refuted claims that 114,213 borrowers were issued with 229,421 loans amounting to Sh161,931,703 before repayment of previous loans saying that the way the system is configured, the above is highly unlikely. 

The Hustler Fund CEO agrees with the auditor that source documents to support the financial statement balances including cashbooks and general ledger were not provided, blaming this on various challenges relating to understanding how the portfolio is being operated and the lack of staffing within the secretariat during the time of the fund set up.

In her report, the auditor general claimed that although the fund received Sh12 billion, the balance was not disclosed in the statement of financial performance for the seven months ended June 2023.

She added that failure to disclose interest earned from Customer Savings Examination of loan disbursement records reveals that the fund had customer savings amounting to Sh1,600,738,661 as of June 30, 2023.

In defense, Hustler Fund says they noted the aforementioned omissions on grants received, interest earned and specification of the correct cut-off period in our report.

"The Fund has included NOTE 17 in the Financial Statements to disclose the Sh12 billion seed capital. The interest earned and the cut-off period have been addressed in the Revised Financial Statements to reflect the true position of funds affairs,'' Nkukuu said.

The Fund has also defended contractual agreements with its partners, saying that the service providers procured all the available Mobile Network Operators in the country and for the banks the Fund got approval from the National Treasury.

"We got an advisory from the Public Procurement Regulatory Authority (PPRA) on the same."

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