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The Nairobian

Safaricom revels in M-Pesa as borrowers take Sh14m per hour

Sci & Tech

By Macharia Kamau | Nov 14, 2016

Kenyans are taking loans of up to Sh14 million every hour through M-Pesa, driving Safaricom’s profitability to astronomical levels.

The firm last week said there are two loans approved every second on the mobile banking platforms that it runs in partnership with CBA Bank (M-Shwari) and KCB Bank (KCB M-Pesa).

Both services offer savings and credit facilities. Safaricom Chief executive Bob Collymore said borrowers have been taking loans of between Sh1,500 and Sh2,500 on M-Shwari and M-Pesa.

Taking Sh2,000 to be the average amount borrowed by every M-Pesa customer, two loans per second would translate to Sh14.4 million per hour and Sh345.6 million per day as the amount of loans disbursed by both CBA and KCB through M-Pesa.

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“Between the two of them (M-Shwari and KCB M-Pesa), we are seeing an approval of two loans every second. The loans are in the range of Sh1,500 to Sh2,500,” said Mr Collymore when the firm presented to investors the financial results for the first six months of this year.

He said some of the borrowers are traders and take loans early in the day to enable them buy supplies delivered to different businesses and tend to repay almost immediately after they have been paid for their deliveries.

“A lot of these loans are taken at the crack of dawn. They are taken at four in the morning by traders who want to buy some stuff, go sell them and by 7am, they have probably repaid the loans already. It is a useful product.” Loans disbursed through M-Shwari are charged a one-off facilitation fee of 7.5 per cent.KCB M-Pesa loans attract a 1.16 per cent interest rate per month and a one-off negotiation fee of 2.5 per cent.

M-Pesa, initially seen as a value-add for Safaricom customers, has grown substantially since its launch in 2007 and is a significant revenue stream for the company.

It is also a pull factor for customers, with many of Safaricom subscribers choosing to stay with the operator despite competitors’ attempts to woo them with cheaper call, SMS and data rates.