Nairobi, Kenya | By Michael Wandati | President William Ruto’s administration is exploring heightened enforcement strategies aimed at recovering defaulted loans from the Hustler Fund through M-PESA accounts and mobile airtime.
This initiative targets approximately 13 million Kenyans who have failed to repay loans from the government-backed social inclusion fund, totaling Sh7 billion.
Elizabeth Nkuku, the acting CEO of the Financial Inclusion Fund (Hustler Fund), provided insights on these proposals during her testimony before the National Assembly’s Special Funds Account Committee.
“What we are looking at is to get money from their M-PESA or airtime, we are in the process of considering appropriate legal provision,” she said.
However, the proposal to recovering defaulted loans from the Hustler Fund through M-PESA accounts and mobile airtime will need to comply with the stringent regulations of the Data Protection Act, which restricts unrestricted access to personal data unless it pertains to individual activities, national security, or public interest.
Nkuku revealed that a significant portion of the defaulters has the financial capacity to repay their loans, noting that data indicates they conduct transactions averaging Sh21,000.
“They are mostly people who borrowed in the first and second months and the default amount [is] about Sh7 billion,” she told the House team.
“The beauty of this Fund is that we have the phone numbers and the unique identifiers of the defaulters, the national ID. They are people of means, they are people who just don’t want to repay,” Nkuku remarked.
Data privacy concerns
Submissions to the committee also disclosed that the government had not insured the Hustler Fund against potential bad debts, prompting the current proposal.
Kabuchai MP Majimbo Kalasinga called for measures to safeguard the fund, threatening to advocate for its withdrawal due to concerns regarding insurance.
“Can we know if the money was insured and which insurance company? We can recommend the Fund to be wound up. How can we give out billions uninsured?,” posed Kalasinga.
The new proposal could ignite renewed discussions on data privacy, particularly given that lawyers had previously opposed a request from the Kenya Revenue Authority (KRA) to access taxpayers’ M-PESA and bank account information for investigating tax evasion and compliance.
The Law Society of Kenya (LSK), as highlighted in the Finance Bill 2024, expressed concerns that such measures could infringe upon individuals’ right to privacy.
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“The proposal undermines the rights guaranteed by Article 31 and Article 24 of the Constitution,” LSK said at the time.
In the bill, the National Treasury proposed that the Kenya Revenue Authority (KRA) be exempted from the law that prohibits access to taxpayers’ private data.
This provision aimed to allow the KRA to obtain information “when disclosure is necessary for the assessment, enforcement or collection of any tax or duty under a written tax law.”
Currently, existing laws prevent government agencies from compelling banks and telecommunications companies to release customer data unless a court order is presented.
Article 31 of the Constitution guarantees the right to privacy, which stipulates that individuals have protections regarding their personal “information relating to their family or private affairs unnecessarily required or revealed.”
