Kenyans are borrowing Sh1.57 billion daily through Fuliza
The irresistible urge to borrow using Safaricom’s overdraft service Fuliza comes with regret with many citing debt burden that comes with it, a new survey says.
Borrowings from Safaricom’s overdraft service rose by 30.7 percent in the six months to June this year, underlying the biting cost of living forcing many Kenyans to rely on short-term mobile loans to meet their needs.
The amount of cash disbursed on Fuliza hit Sh288 billion in the first half period up from Sh220.38 billion in the same period last year.
This represents a consistent rise from Sh176 billion in a similar period in 2020.
The jump in overdrafts translates to Sh1.57 billion daily borrowing between January and June this year, compared to Sh1.2 billion and Sh972.3million over a similar period of 2021 and 2020 respectively.
The overdraft service introduced in 2019 and underwritten by NCBA Group and KCB Group allows customers to meet essential needs such as shopping, rent, sending money to friends and family or paying for goods and services on mobile money service, M-Pesa.
This rise comes amid an increase in prices of goods and services meaning that individuals would utilize the service to cover their budget.
The cost of living measure –inflation - rose to a 61-month high to 8.3 percent in July on soaring food and fuel prices from 7.9 percent in June.
NCBA Group chief executive Mr John Gachora said the jump in disbursements through Fuliza follows a pull back from digital loan platform, M-shwari, which recorded a 6 percent drop in loans borrowed over the period.
M-shwari disbursed Sh42 billion compared to Sh44.8 billion worth of loans which were disbursed over the same period in 2021.
“The growth on Fuliza tell us is not just new customers but also customers that use M-shwari opting to use easier credit available in Fuliza,” Mr Gachora said.
“A year and a half ago we noted that we had reached the maturity of M-shwari and indeed what we have seen in terms of disbursement is that this year we are six percent below where we were last year. This is just the maturity of the product and these are the numbers we could see after organic of M-shwari. Part of that reduction may be because more people are opting to use Fuliza as opposed to M-shwari.”
Borrowing on Fuliza has been surging since 2020 when the economy was hit by the Covid-19 pandemic leading to massive shedding of jobs affecting household incomes.
The impact of the pandemic has reduced but high inflation from the global impact of fuel price jump and the Russia and Ukraine war has been weighing down the economy and businesses that were just recovering from the impact of the pandemic.
“We have provided an enabling environment for businesses to continue to thrive by increasing our product portfolio and tailoring solutions to suit every customer’s needs, especially during this period which experienced challenges from the Russia-Ukraine war and risks emanating from the political calendar. Through our digital banking partnerships, we continue to provide much-needed financial relief to many families and small businesses,” added Mr. Gachora.
Total loans disbursed through Fuliza and M-shwari at Sh320 billion represent 94.4 percent of the total Sh339 billion disbursed through all its digital products including Mpawa, Mokash and Momokash in regional markets.
