- Borrowing from Safaricom Fuliza’s overdraft service rose 43.6% to 351.2 billion shillings in the fiscal year ended March when economic hardships from Covid-19 such as layoffs and pay cuts have strained household budgets.
- Borrowing from Fuliza, which allows subscribers to carry more than the money available in their M-Pesa wallets, fell from 244.6 billion shillings a year earlier.
Loans from Safaricom #ticker: SCOM Fuliza overdraft service rose 43.6% to 351.2 billion shillings in the fiscal year ended in March when economic hardships from Covid-19 such as layoffs and layoffs Pay cuts have put a strain on household budgets.
Borrowing from Fuliza, which allows subscribers to carry more than the money available in their M-Pesa wallets, fell from 244.6 billion shillings a year earlier.
The surge in overdrafts, resulting in daily borrowing of 962 million shillings, came at a time when the economy shed thousands of jobs due to weak corporate profits, Covid-control measures. 19 such as curfews and lockdowns that have hampered economic activities.
Safaricom data shows that the number of daily active Fuliza customers doubled from 700,000 to 1.4 million during the reporting period.
An increase in short-term borrowing – mainly to meet basic needs such as food and rent – signals the increased reliance on debt that has accompanied the massive loss of income seen in the economy.
This came after KCB-Mpesa and Mshwari – which are Safaricom’s other mobile credit products – saw declines in loan values and user numbers.
The KCB and NCBA have tightened approval measures after the Central Bank of Kenya froze the list of defaulters of 1,000 shillings and less in a coronavirus environment.
NCBA and Safaricom in August last year also increased the minimum M-Shwari loan size four times to Sh2,000 from Sh500 in a move that bolstered Fuliza’s popularity.
The value of KCB-M-Pesa loans fell 56.2% to 51.1 billion, as users fell by 1.5 million. Mshwari loans fell 27.1% to 94.5 billion shillings while users fell by 700,000.
The increase in fuliza overdrafts brought Safaricom 4.5 billion shillings in revenue, 61.3% more than the 2.8 billion shillings earned in the previous similar period.
Safaricom charges Fuliza customers a one-time interest of 1.083% and a daily administrative fee which depends on the outstanding balance.
The revenues of Mshwari and KCB-Mpesa telecommunications company were 3 billion shillings, compared to 3.1 billion shillings in the previous period.
The default rate for the Fuliza overdraft is usually very low as the debt is settled instantly when the client’s M-Pesa wallet receives money, unlike Mshwari where clients must be prompted to pay. The latest revelations show that Fuliza had a repayment rate of 98.4% during the reporting period, unlike Mshwari (53.9%) and KCB-M-Pesa (51.3%).
Fuliza was introduced in 2019 and is popular among low-income people who take out small loans for their daily needs, with debt usually settled after sales or wages are received. Fuliza charges start from 2 shillings per day for an overdraft of 100 shillings and go up to 30 shillings per day for 2,500 shillings and above.