The government is seeking an extra Sh650 million from the Treasury in the next budget for the former President Uhuru Kenyatta-era Uwezo Fund, citing increased demand for its loans despite falling disbursements and weak repayment.
The State Department for Micro, Small and Medium Enterprises (MSME) Development says demand has increased following public awareness and sensitisation campaigns, creating pressure for additional financing despite the Fund’s declining disbursements.
The Uwezo Fund was established in 2014 under Mr Kenyatta, who honoured a pre-election pledge to use the budget for the repeat presidential vote to provide affordable credit to women, youth and persons with disabilities at constituency level.
There was no repeat presidential election after he, then deputised by the current President William Ruto, got more than 50 percent of the total votes in the first round.
Cumulatively, 82,957 groups out of more than 115,000 applicants have received interest-free loans, the MSMEs department says, leaving 32,043 groups that applied without financing.
“As a result of the increased demand for loans due to enhanced public awareness campaigns and sensitization, the Fund is requesting an additional Sh650 million to cater for the deficits and in support of new product targeting priority value chains,” the department said in the draft medium-term expenditure framework report for 2027/28-2029/30, currently undergoing public participation.
“The funds will also cater for the capacity building of the beneficiary groups, which is a mandatory requirement before they are issued with the loans.”
Uwezo has already expanded beyond its traditional lending model through Wezesha Majuu, which supported 221 young people with Sh35 million for youth labour mobility.
First-time borrower groups access between Sh50,000 and Sh100,000 under the Wezesha loan product, rising to Sh500,000 for repeat borrowers under the Endelea Product.
Uwezo also offers a maximum of Sh500,000 to groups of three members with job offers abroad to meet costs for visas, tickets, and settlement costs, which supported 221 young people with Sh35 million under the Wezesha Majuu loan product in the year ended June.
The proposed Sh650 million injection will also support a new value-chain lending product, although the government has not disclosed the sectors targeted or the number of beneficiaries expected.
The plan for additional funding comes as the State-sponsored credit programme struggles to turn growing interest into actual financing, with lending falling below the government’s annual target since the Ruto administration took office.
Uwezo disbursed Sh312 million in the year ended June 2026, a fall of 26.6 percent from Sh425 million a year earlier and falling short of the targeted Sh600 million by nearly half, or 48 percent.
The report further shows that the rate of recovery for loans issued was 44 percent last fiscal year, a slight improvement from 42 percent but still below the government’s 45 percent target for that period.
Uwezo Fund's ability to meet rising demand has been undermined by weaknesses in its grassroots management and loan recovery structures in recent years.
The MSMEs department says the tenure of most Constituency Uwezo Fund Management Committees (CUFMC) has expired, disrupting operations and making it harder to recover loans from beneficiaries.
“In the absence of a functional CUFMC, the recovery is affected,” the department says.
The Fund is also facing staffing gaps in some constituencies after several Youth Development Officers, who serve as committee secretaries, retired.
The Ruto administration is betting that additional funding and technology can help revive lending while improving the management of the Fund.
Uwezo has fully digitised its loan application and management systems, allowing beneficiaries to apply for loans and manage repayments electronically.
The Fund has also been onboarded onto eCitizen for loan applications and repayments, reducing reliance on physical processes at constituency offices.
The department says digitisation will increase access among the target population and improve management, although the report provides no evidence yet that technology has raised lending or recovery.
