Kenyans Borrow Sh381B Through Platforms – Safaricom

More Kenyans who cannot access formal banks are turning to mobile short-term overdraft facilities for their daily subsistence to cope with current challenging financial times.

New data shows that between April and September, an estimated 15 million Kenyans borrowed Sh380.7 billion through Fuliza, M-Pesa and Mshwari platforms, amid dwindling sources of income and high cost of living.

Safaricom has partnered with lenders, NCBA Bank and KCB to operate Fuliza, an overdraft product that enables customers access to an unsecured line of credit by overdrawing on M-Pesa to cover short term cash flow shortfalls, subject to predetermined limits.

The telco also runs the KCB M-Pesa and Mshwari lending platforms that enables customers save as little as Sh1 to qualify for loans of between Sh50 to Sh1 million. Data from the company’s half year financials for the period ending September 2023 released last week show an increase in distinct customers and average loan disbursement figures.

The number of those using Fuliza increased by 14.2 percent to 7.4 million from 6.4 million recorded in September 2022 and borrowed Sh 315 billion up 30.1 percent from Sh242 billion, while Mshwari customers grew to 4.4 million with average loans disbursed increasing by 20.1 percent from Sh6,047 to Sh7,260 with a total value of Sh43 billion. They also borrowed Sh21.7b through KCB M-Pesa.

Safaricom Chief Executive Officer Peter Ndegwa said the three products drove M-PESA’s growth, which saw the mobile money wallet’s half year transactions value spike 32 percent Year on Year (YoY) to Sh18.9 trillion, while total YoY transaction volumes rose 32 per cent to Sh9.06 billion.

“M-Pesa usage continues to grow, driven by our Fintech solutions including payment, lending and savings, and international remittances,” said Ndegwa.

Digital loans have become in Kenyans daily lives was underlined by President William Ruto in September, when he spelled out a raft of measures to lower their cost to increase financial inclusion.

Fuliza loans attract daily interests of between Sh3 and Sh25, while Mshwari disburses at 9 percent interest rate.

This is in comparison to the commercial bank’s weighted average lending rates of 12.41 percent as of September 2022.

Kenyans use the money to buy basic household commodities like food and settling utility bills, thereby cushioning them from inflationary pressures, with the cost of living having risen to 9.6 percent last month from 9.2 percent in September, above the 9.5 percent market forecasts.

The rate has also breached the upper limit of the Central Bank’s target range of between 2.5 percent and 7.5 percent for the fifth straight month.

The telco’s half year net profits declined by 10 percent to Sh33.4 billion, due to the impact of new capital investment in its Ethiopian venture, review of mobile termination rates and introduction of excise tax on SIM cards which slowed growth in its Kenyan operations.

Revenue service grew slightly by 4.6 percent while voice and messaging dipped by 3.8 percent to Sh39.9 billion and Sh5.4 billion, respectively.

However, Mpesa revenue partly offset the decline in the legacy telco services, growing by 8.7 percent to Sh56.9 billion from Sh52.3 billion a year ago.

Mobile data revenue posted a double digit rate of growth at 11.3 percent to Sh26.3 billion from Sh23.6 billion while fixed data service revenues recorded the highest growth at 23 percent to Sh6.8 billion.