Kenyans borrowed Sh1.32 billion daily from Safaricom’s overdraft facility Fuliza between April and September this year, underlining increasing reliance on loans for household use.
This was revealed by Safaricom on Wednesday, which posted a Sh37.055 billion net profit for the half year to September 30 boosted by higher M-Pesa revenue.
Safaricom’s financial results show that the company disbursed Sh242.6 billion in the 183-day period, a 62.4 per cent increase from a similar period last year when it loaned out Sh149.4 billion through the facility.
Fuliza, which is owned 40 per cent each by Safaricom and NCBA and 20 per cent by KCB Group, has quickly grown in popularity since it was launched in early 2019. It now has 1.7 million active daily users.
The overdraft facility has dwarfed the company’s other loan products such as KCB M-Pesa and M-Shwari, which were launched by Safaricom years before Fuliza, underlining its popularity.
Kenyans borrowed Sh22.9 billion and Sh43.4 billion from KCB M-Pesa and M-Shwari respectively during the half year.
Fuliza earned Safaricom revenues of Sh2.8 billion in the half-year period, a 32.2 per cent increase from Sh2.1 billion it earned the company in the same period last year.
It is also the best performing in terms of repayment rate especially due to its unique model of automatically deducting outstanding dues from any receipts in the borrower’s M-Pesa account.
The repayment rate of Fuliza loans stood at 99 per cent during the period compared to KCB M-Pesa and M-Shwari which recorded repayment rates of 98.6 per cent and 63.5 per cent respectively.
Fuliza loans above Sh2500 attract a daily fee of Sh36, while those between Sh1,500 and Sh2,500 are charged Sh30 per day. Loans between Sh1,000 and Sh1,500 are charged Sh24 daily.
Meanwhile, the average Fuliza loan is about Sh375 per transaction, highlighting the facility’s reach especially among the lower-income cadres of M-Pesa users, compared to KCB M-Pesa and M-Mshwari whose average loan size is Sh9,070 and Sh6,047 respectively.
Transition to tech company
Tapping into Kenya’s burgeoning digital financial services market is part of Safaricom’s multi-pronged five-year plan as it seeks to transition from a telecommunications company to an integrated technology company.
Safaricom chief executive Peter Ndegwa said the firm has 65 mini-apps under development to offer different solutions within the Safaricom app.
The company is also seeking to shore up revenue from voice, which has been its main cash cow for long.
“We are focused on driving access to affordable smart phones to harness the power of technology. This will in turn help build stronger digitally connected and inclusive societies. We aim to become a digital first incise-led company that enables platforms and ecosystems partnerships,” Mr Ndegwa said.
