Safaricom interim Chief Michael Joseph has expressed disappointment at the direction some of its mobile credit facilities have taken.
Joseph hinted that the telco might, as a result, be forced to review them in the next few months.
He explained that the initial intention for such a product as M-Shwari was to promote a savings culture, but instead, the reverse has happened, with customers borrowing more, sometimes to clear other loans.
Mr Joseph noted the repayment costs are too high as customers are charged a 7.5 per cent fee for each loan.
“We wanted to create a savings culture, not a borrowing culture where you could borrow multiple your savings,” said Joseph on Tuesday during the marking of Safaricom’s 19th anniversary in Nairobi.
“It became extremely successful except people borrowed more than they saved,” he added. M-Shwari was launched in 2012 in a partnership with Commercial Bank of Africa (CBA) to enable customers to save and take microloans through the M-Pesa platform and has over 22 million registered users.
It came after the flop of Mkesho, the world’s first mobile banking application, which was a partnership with Equity Bank. The two have, however, pledged to revamp it, noting it has 20,000 customers.
Mr Joseph hailed the product, saying the team behind it had grown it into “something extraordinary.” He at the same time lauded Fuliza, Safaricom’s latest overdraft facility that was launched by the company’s late CEO Bob Collymore, as an “extremely brilliant product”
In the first six months of the year, Safaricom customers borrowed Sh81 billion on Fuliza.
It is a partnership involving Safaricom, CBA and KCB Group. The revenue is split among the three at 40 per cent, 40 per cent and 20 per cent respectively.
For the financial year ended March 2019, M-Pesa revenues grew by 19.2 per cent to Sh74.9 billion, making it one of the two largest contributors to the telco’s earnings.
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.
