Borrowings from Safaricom’s overdraft service increased by 30.7 percent in the six months to June this year, highlighting the high cost of living that has forced many Kenyans to rely on short-term mobile loans to meet their needs.
The amount of cash disbursed on Fuliza reached Sh288 billion in the first half period, up from Sh220.38 billion in the same period last year.
This represents a consistent increase from Sh176 billion in the same period in 2020.
The increase in overdrafts translates into Sh1.57 billion in daily borrowing between January and June of this year, compared to Sh1.2 billion and Sh972.3 million in the same periods in 2021 and 2020, respectively.
Customers can use the overdraft service, which was launched in 2019 and is sponsored by NCBA Group and KCB Group, to meet essential needs such as shopping, rent, sending money to friends and family, or paying for goods and services using the mobile money service, M-Pesa.
This increase coincides with an increase in the prices of goods and services, implying that people will use the service to supplement their income.
Inflation rose to a 61-month high of 8.3 percent in July, from 7.9 percent in June, due to rising food and fuel prices.
Mr. John Gachora, CEO of NCBA Group, stated that the increase in disbursements through Fuliza follows a withdrawal from the digital loan platform, M-shwari, which recorded a 6% drop in loans borrowed during the period.
M-shwari disbursed Sh42 billion in loans, compared to Sh44.8 billion in loans disbursed during the same period in 2021.
“The growth on Fuliza tell us is not just new customers but also customers that use M-shwari opting to use easier credit available in Fuliza,” Mr Gachora said.
“A year and a half ago we noted that we had reached the maturity of M-shwari and indeed what we have seen in terms of disbursement is that this year we are six percent below where we were last year. This is just the maturity of the product and these are the numbers we could see after organic of M-shwari. Part of that reduction may be because more people are opting to use Fuliza as opposed to M-shwari.”
Borrowing on Fuliza has increased dramatically since 2020, when the economy was hit by the Covid-19 pandemic, which resulted in massive job losses that impacted household incomes.
The pandemic’s impact has been reduced, but high inflation from the global impact of fuel price increases and the Russia-Ukraine war has been weighing down the economy and businesses that were just recovering from the pandemic’s impact.
“We have provided an enabling environment for businesses to continue to thrive by increasing our product portfolio and tailoring solutions to suit every customer’s needs, especially during this period which experienced challenges from the Russia-Ukraine war and risks emanating from the political calendar. Through our digital banking partnerships, we continue to provide much-needed financial relief to many families and small businesses,” added Mr. Gachora.
Total loans disbursed through Fuliza and M-shwari total Sh320 billion, accounting for 94.4 percent of total Sh339 billion disbursed through all of its digital products in regional markets, including Mpawa, Mokash, and Momokash.
