Safaricom’s M-Pesa “Fuliza”overdraft service goes global

Safaricom has announced plans to take its M-Pesa overdraft service, Fuliza, to seven new African countries as the telco seeks to tap into the high demand for instant, micro-loans.

The telecommunications firm wants to introduce Fuliza in six other countries outside Kenya.

These include Tanzania, Lesotho, Ghana, the Democratic Republic of Congo (DRC) and Mozambique where Safaricom’s mobile money service M-Pesa is already available through its parent company, Vodacom.

M-Pesa services are also available in India through Vodacom.

Fuliza, an overdraft facility that allows M-Pesa users to borrow small, short-term loans, was launched on January 5 through a partnership involving Safaricom, Commercial Bank of Africa (CBA) and KCB Group.

The banks provide M-Pesa users with top-up loans whenever they need to make a transaction, but find they lack enough money in their mobile cash wallets.
Borrowers in Kenya can take loans of up to Sh70,000 that can be used to buy goods or pay bills.

The money is also transferrable to other mobile subscribers.

“What we have also done with Fuliza is looked at it not just from a Kenyan perspective, but with our (parent) company Vodacom.

“There are seven countries in Africa that run M-Pesa and we’ll be looking into taking Fuliza to those markets first,” said Safaricom’s Chief Financial Services Officer Sitoyo Lopokoiyit in an update shared last week.

“It’s in line with the idea to take other products and services we have developed in Kenya into other markets.”

M-Pesa subscribers in Vodacom’s Tanzania, the DRC, Mozambique and Lesotho markets expanded by 227,000 customers in three months to hit 13.4 million users at the end of December last year, according to Vodacom.

Growing popularity

This is an indication of the growing popularity of the mobile money service in other African markets. M-Pesa has about 21 million users in Kenya alone.

The growth of M-Pesa also helped push up Vodacom’s service revenues of operations outside South Africa and Kenya by 13.2 percent.

Safaricom says the creation of the Fuliza service was informed by data which indicated that millions of transactions were cancelled every day due to insufficient funds.

Within the first month of launch, Safaricom customers borrowed Sh6.2 billion, equivalent to an average daily lending of more than Sh200 million.

“The research and the big data showed us that providing a facility that will enable the transaction to be completed is something that was needed,” said Mr Lopokoiyit.

The Fuliza loans attract a facility fee of 1.083 percent of the value of the credit. The daily fee translates to about 395.2 percent on a per annum basis.

Annual lending rate

The current maximum annual lending rate of 13 percent on bank loans.

For comparison, this translates to a daily interest rate of 0.035 percent. Some legislators have been pushing for inclusion of mobile loans under the Central Bank of Kenya regulation to bring them at par with the regulated bank loans.

The overdraft facility has a maturity term of 30 days beyond which a borrower is deemed to be in default.

Recovery of the loans is enforced through deductions from customers’ balances and inflows into their CBA and M-Pesa accounts.

Besides the facility and administration fees, Fuliza also attracts standard M-Pesa charges, further boosting the telco’s earnings from the mobile money platform.

“…There are over 60 organisations providing credit in Kenya and if you look at the way Fuliza has been designed as an overdraft, the fee is actually quite small when you look at how quickly someone pays.

“So it’s not a loan. We are listening to our customers, and we think it’s priced right,” said Mr Lopokoiyit.


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