Safaricom customers borrowed Sh81 billion over the first six months of this year on the telecommunication company’s Fuliza overdraft facility, new data shows.
Analysts at Standard Investment Bank (SIB) say the amount is based on results published by the telco’s partner banks.
The Fuliza overdraft facility is a partnership involving Safaricom, Commercial Bank of Africa (CBA) and KCB Group.
With the revenue share split between Safaricom, CBA and KCB Group set at 40 per cent, 40 per cent and 20 per cent respectively, the three entities could have earned as much as Sh2.4 billion over the six months.
“In the six months to June 2019, KCB disbursed Sh27 billion, suggesting that CBA would have extended Sh54 billion, bringing the total amount disbursed to Sh81 billion,” said SIB in an analysis of the product.
“The current revenue sharing formula for the Fuliza product is 40:40:20 for Safaricom, CBA and KCB respectively. KCB earned Sh484 million in the first half of 2019 in revenue from Fuliza, thus totalling Sh2.4bn for the entire product to end of June 2019, by our estimates.”
Using the revenue sharing formula as a guide, SIB said, Safaricom could have more than doubled the revenue earned quarter on quarter to Sh668m.
Fuliza was launched in January this year, offering users an overdraft to complete transactions if they run out of funds in their M-Pesa accounts.
During the first month after launch, the telco advanced Sh6 billion.
Like its other mobile lending products like M-Shwari and KCB M-Pesa, Fuliza is run in partnership with the two banks using algorithms from M-Pesa’s transactional data to determine loan limits for users.
Analysts have in the past said Fuliza could in the medium to long-term present competition to traditional payment methods like credit and debit cards.
This has reignited the debate on whether Safaricom should also be subjected to financial sector regulations.
The service partly contributed to Safaricom’s growth in the financial year to March this year, but its full impact will be felt in this year’s numbers.
It could be among the genius moves that the company has made in the recent past as it seeks to increase revenue streams.
The company’s profit after tax grew 14.7 per cent to Sh63.4 billion in the year to March this year compared to Sh55.29 billion last year.
Revenues went up to Sh250.9 billion, which is a 7.1 per cent rise from Sh234 billion previously.
Safaricom said on average, every customer spends Sh658 per month on its different services – voice calls, text messages, data or mobile money.
Voice remained the largest contributor to the firm’s revenues, data and mobile money now command a significant share, with M-Pesa’s contribution (currently at 31.2 per cent) expected to surpass voice revenues (36.6 per cent) in another three years.
Mobile data, which contributed 16.1 per cent of revenues last year, suffered following the imposition of new taxes.
The segment grew six per cent during the year compared to 23 per cent previously.