Millions of Kenyans accessing Fuliza for amounts less than Kes1,000 will see their loan rates waived if they repay in three days and cut by half if they pay after the period starting October 1st.
In a deal that is set to positively impact over 85 percent of Fuliza users, Safaricom, and lenders KCB Group and NCBA have partnered to enhance financial inclusion in the country while also extending a hand up to millions of Kenyans from current economic hardships.
“We are reducing the daily maintenance fee by 50 percent for Fuliza transactions of Kes1,000 and below after the free three-day access,” explained Safaricom CEO Peter Ndegwa at an event graced by President William Ruto.
In the deal, M-PESA customers will also enjoy a reduced daily maintenance fee for transactions above Kes1,000 to a maximum of Kes70,000 even as the Fuliza access fee remains at the current 1 percent across all borrowings.
This establishes Fuliza as the most accessible and affordable credit facility at only 1 percent of the transaction value especially when customers pay on a short period of time, noted Mr Ndegwa.
“This restructure aims to reinforce the original purpose of Fuliza, a short-term overdraft facility for four to seven days. From the data that we have, it is clear that the original intent for Fuliza to be a short-term credit facility has evolved. Since the Covid-19 pandemic, many customer M-PESA wallets are now remaining overdrawn for 14-19 days. This is what we intend to address with this announcement.
“Additionally, we wish to express our intention to work with our partners and other industry stakeholders to rethink the credit information-sharing framework that underpins Credit Reference Bureaus (CRB )to better enable Kenyans, especially Kenyan entrepreneurs, to access credit more seamlessly. The specific mechanisms for this for M-Shwari and Fuliza customers shall be announced by 1st November 2022.” said NCBA Group Managing Director, Mr John Gachora.
Mr Ndegwa lauded Dr Ruto noting that his new administration’s support has made it possible for the telco and partner lenders to ease Fuliza rates as part of their commitment to offer Kenyans sustainable and affordable credit.
KCB Group Chief Executive Officer Paul Russo said, “Through the collaboration of these three organizations, we’ve built innovative products. But the challenge remains to create meaningful livelihoods, and we have to tackle it together as partners.”
The regional lender has been recording a steady rise in the uptake of mobile lending with volumes recorded on mobile surging 39 percent to Kes2.1 trillion in the 2021 fiscal year.
“We are confident that the new regime which we are announcing on our joint product in partnership with Safaricom and NCBA will grow micro-enterprises who rely on affordable loans to spur entrepreneurial spirit,” added Mr Russo.
Since its launch, Fuliza has become a critical part of the financial lives of millions of Kenyans, given its mobile-phone-centric delivery channel that provides customers the ability to fulfill transactions that they would otherwise have not accomplished due to a lack of sufficient M-PESA balance.
Going forward, Mr Ndegwa said the partners will keep innovating with a view to bringing on board investment and insurance solutions that will empower customers to better their financial health.
Central Bank of Kenya Governor Dr Patrick Njoroge noted that “The CBK welcomes the restructuring of the product (Fuliza), including the pricing changes announced today. In our view, this is a first step in ensuring more Kenyans can access financial services.”
At the height of the Covid-19 pandemic two years ago, Safaricom facilitated free M-PESA transactions for amounts Kes1,000 and below to support customers and businesses to transact remotely.
M-PESA has driven financial inclusion in Kenya to more than 84 percent of the adult population from a low of 25 percent when it was launched in 2007, placing Kenya third in formal financial inclusion in the continent in the Global Findex indicators.