Kenyans borrow Sh1b daily from Safaricom via ‘Fuliza’

 

Peter Ndegwa, Chief Executive Officer, Safaricom PLC [Wilberforce Okwiri, Standard]

Kenyans borrow nearly a billion shillings a day through Safaricom’s overdraft facility Fuliza.

New data released by the telecommunications company reveals that its customers borrowed Sh351 billion in the year to March 31, which was a 44 per cent increase compared to Sh244.6 billion during the previous year.

This coincided with the period when the country was ravaged by the coronavirus pandemic, which saw many companies retrench workers while those who retained their jobs had their pay slashed. This had many of them seeking short-term loan facilities such as Fuliza and Mshwari to meet daily expenditure.

During the period, the number of customers on the Fuliza platform doubled to 1.4 million in the year to March 2021 from 700,000 in March 2020.

The facility earned Safaricom Sh4.5 billion profit – which comes from the fees borrowers pay – which was 61.3 per cent more compared to Sh2.8 billion earned last year.

Fuliza was among the few of Safaricom’s revenue streams that posted significant growth, with the rest declining or posting marginal growth.

The telco reported a 6.8 per cent drop in profit after tax to Sh68.6 billion for the year from Sh73.6 billion reported in a similar period last year. This was partly on account of the Covid-19 pandemic, which eroded earnings and the spending power of many of its customers, a chunk of whom resorted to taking loans on its platform as well as zero-rating mobile money transactions under Sh1,000.

Safaricom Chief Executive Peter Ndegwa yesterday told investors the company’s earnings for the past financial year were better than anticipated as the company and the economy appeared to head into recovery in the last half of the last financial year.     

The company recorded Sh250 billion in total service revenue, a decline of 0.3 per cent with earnings from M-Pesa at Sh82 billion in the period under review, down from Sh86 billion made last year.

Fuliza, which was launched in early 2019, has now overtaken Mshwari – which Safaricom runs in partnership with NCBA – and KCB M-Pesa, in terms of the loans advanced to M-Pesa customers.

In comparison, Mshwari advanced loans valued at Sh94.5 billion to borrowers on Safaricom’s mobile money platform. The amount advanced by Mshwari was also 27.1 per cent lower compared to Sh129.6 billion it had advanced to borrowers in the year to March 2020.

It is also in comparison to the Sh51 billion that KCB M-Pesa loaned to borrowers over year. The service also saw a major dip, with the loans disbursed dropping 56.2 per cent from Sh116.6 billion it advanced in the year to March 2020. Despite Fuliza beating the two credit and savings facilities, the number of M-Pesa users that have subscribed to Mshwari and KCB M-Pesa is much larger than those using Fuliza, whose daily active customers stood at 1.4 million. According to Safaricom, Mshwari has four million one-month active customers, although this is a decline from 4.7 million last year. KCB M-Pesa had 3.3 million users, a 32 per cent drop from 4.8 million in 2020.

This could be an indication that Fuliza may be eating into the shares of the two other facilities, especially for borrowers who are borrowing low-value loans.