Auditor General Nancy Gathungu has raised serious concerns over Sh8 billion allocated to the government’s Hustler Fund in the financial year ending June 2023, declaring it unaccounted for—despite the amount having been disbursed by the National Treasury to the State Department for Cooperatives Development.
In her audit report for that financial year, Gathungu revealed the State Department spent Sh14 billion against an approved budget of Sh12.26 billion, resulting in an under-absorption of Sh8.2 billion—representing 36 percent of the total allocation. This discrepancy centres on the Hustler Fund.
Appearing before the National Assembly’s Public Accounts Committee (PAC), chaired by Butere MP Tindi Mwale, Cooperatives Principal Secretary Patrick Kilemi acknowledged difficulties in accounting for the funds. He explained that although Sh12.26 billion was allocated for the Hustler Fund, the department only requested Sh12 billion. Kilemi added that Sh1.10 billion was repaid following the final disbursement—leaving a shortfall of Sh8.2 billion.
Kilemi attributed the missing funds to procedural gaps during a period of government transition. He clarified that standard procedure requires funding requests to be initiated by a department’s Chief Finance Officer, approved by the Principal Secretary, and then submitted to the National Treasury.
“In this case, the Sh8 billion may not have been requested through the proper channels, and that is why it did not come through,” Kilemi told the committee.
He further explained that when the new administration took office, the State Department for Micro, Small and Medium Enterprises (MSMEs)—now in charge of the Hustler Fund—had not yet been formally established within government financial systems. As a result, responsibility temporarily fell on the State Department for Cooperatives, which Kilemi headed at the time.
“This is why I received the funds on behalf of that department and now find myself responding to questions on what transpired,” he said.
PAC members expressed strong dissatisfaction with the explanation. Chairman Mwale challenged Kilemi directly, emphasising that the statutory duty to request funds lies solely with the Principal Secretary—not agency CEOs.
“You should have reviewed the documents explaining the missing Sh8 billion allocated to the Hustler Fund. You cannot pass the buck by saying there was a failure to submit a request. Procedure demands that the department you head ensures compliance,” Mwale said, stressing that public funds “should be accounted for to the last penny.”
Funyula MP Dr Wilberforce Oundo pressed the PS to provide written evidence of the process followed regarding the Sh8 billion. He also questioned whether an executive order had formally transferred the Hustler Fund’s management from Cooperatives to MSMEs.
“Where is the money? We need to understand whether someone slept on the job or whether the money was injected into an economy that was saturated and could not absorb such an amount,” Oundo said.
In response, Kilemi maintained that a full explanation and financial reconciliation should come from the current custodians—the State Department for MSMEs.
“The State Department for MSMEs and officials in charge of the Hustler Fund should be able to provide a detailed explanation, including sources and reconciliation of their accounts,” he told the committee. He added that although the department had made a formal request to the Treasury, it did not receive the expected Sh8 billion.
Separately, Senators and Members of the National Assembly are reported to have agreed on a Sh4.5 billion allocation to counties. The two Houses are expected to push for increased funding to devolved units, setting a baseline for revenue sharing—distinct from the Sh370 billion allocated for national government employee compensation, income tax, and other obligations. Further details on this allocation were not provided.
– By Nusurah Nuhu
