Safaricom lends Sh1b in eight days on Fuliza

Safaricom Chief Executive Bob Collymore with Chairman Nicholas Ng’ang’a and Chief Financial Officer Sateesh Kamath during the company’s annual general meeting. [File, Standard]

Safaricom’s recently launched overdraft facility Fuliza lent out more than Sh1 billion just one week after going live, signaling the growing popularity of mobile loans in the Kenyan market.

Chief Executive Bob Collymore said the M-Pesa service that advances credit - allowing users with inadequate funds to make purchases or pay utility bills - has seen overwhelming uptake from users.

“We got a million (customers) by day eight and by (then) we had lent $10 million (Sh1 billion). Now we are probably at $15 million (Sh1.5 billion),” he said in an interview with Reuters.

“If you don’t have enough cash, you simply draw down from the overdraft and you keep drawing down until you have got to your overdraft limit, which is predetermined by an algorithm.”

Fuliza went live on January 7 following approvals by the Central Bank of Kenya and is available to all 20 million registered M-Pesa users. The service gives users a loan limit based on their M-Pesa transactions, allowing them to borrow several times within the limit.

Lenders KCB and Commercial Bank of Africa that currently run mobile lending partnerships with Safaricom under the M-Shwari and KCB-Mpesa brands are also the underwriters of Fuliza.

A report by financial consultants Citibank last week upgraded the rating on Safaricom’s stock from ‘neutral’ to ‘buy’ while estimating the share to hit Sh27 on the back of Fuliza.

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“Based on the popularity of Okoa products (emergency credit for airtime and data, fees which generate two per cent of service revenue for Safaricom), we think demand for overdraft is likely to be strong,” said Citibank in the report.

The bank further said the new instruments could also improve yields on Lipa na M-Pesa transactions significantly, making it a key incentive for the firm to drive more merchants to take up till numbers.

The impressive results from Fuliza are likely to drive more investor interest towards Kenya’s fintech market, and at the same time push players to develop new value addition for existing products.

Earlier this week, mobile lender Branch International announced a Sh500 million capital injection that will facilitate the firm’s expansion in the Kenyan market.

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Chief Executive Bob CollymoreSafaricomM-PesaM-ShwariChief Financial Officer Sateesh KamathBob Collymore