Sh9.7b borrowed weekly from Safaricom’s Fuliza

Mobile phone loan application approval. [Courtesy]

Kenyans borrowed 9.67 billion shillings a week through Safaricom’s Fuliza overdraft service in the year to March as a million more customers joined them.

Safaricom revealed yesterday that the value of disbursements through the service reached 502.6 billion shillings in the financial year ending March 2022, compared to 351.2 billion shillings which were disbursed in the previous financial year.

Latest overdrafts result in weekly borrowings of 9.7 billion shillings between April last year and March this year, an increase of 43.1% from 6.75 shillings in the similar period previous of 2020/2021. During the review period, an additional million customers joined the service to bring Fuliza’s total daily active user count to 6.9 million.

The telecom operator says the average note size is now 345.2 shillings. But borrowing per individual could be higher since customers are allowed to take multiple overdrafts before repaying, subject to the approved overdraft limit.

An increase in small, short-term borrowing – mainly used to meet basic needs such as food and rent – signals the increased reliance on debt as the rising cost of living hits Kenyans. KCB M-Pesa and Mshwari, which are the other Safaricom-linked mobile loan products, saw declines in loan values ​​as Fuliza continued to beef them up.

The value of KCB M-Pesa loans fell 9.4% to 46.3 billion shillings despite an increase of 500,000 users to 3.8 million. Mshwari loans fell 8.9% to Sh86.1 billion even as users grew by 700,000. Average loans on KCB M-Pesa fell 21.2% to Sh6,874 while those on Mshwari rose 10.7% to 6,172 Sh.

Safaricom achieved a turnover of 8.54 billion shillings from the three products, with Fuliza’s revenue being 5.94 billion shillings, a jump of 31%. The telecommunications company introduced the Fuliza service in 2019 and has become popular among Kenyans for meeting basic needs such as shopping, rent and supporting friends and family when there is not enough money in their M-Pesa wallets.

Safaricom charges Fuliza customers a one-time interest of 1.083% and a daily administration fee that depends on the outstanding balance. Fuliza fees start from Sh2 per day for an overdraft of Sh100 and go up to Sh30 per day for Sh2,500 and above. Customers who do not clear the Fuliza overdraft within 30 days cannot use their unused Fuliza limit until they clear the outstanding amount.

The Fuliza overdraft default rate is usually very low since the debt is settled instantly when the customer’s M-Pesa wallet receives money. All three products are enjoying increasing popularity among Kenyans due to the ease of access to money compared to traditional bank loans or Shylock services.

Other mobile loan products such as Silicon Valley-backed Tala and Branch, as well as Zenka, Opesa and Okash have popped up, offering short-term loans through loan apps.

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