Harsh economy has pushed Kenyans to increase their use of Safaricom overdraft service Fuliza to a whole new level.
Fuliza overdrafts rose from Sh112.2 billion in a similar period a year earlier, indicating a daily borrowing of Sh830 million.
The jump in the uptake of the loans emerged in a period when the economy shed more than two million jobs in the wake of Covid-19 economic hardships that drove firms into losses.
But the use of M-Shwari loans dropped 14.3 percent to Sh47.5 billion — a pointer that Safaricom and its partners were stringent on isssuing loans. Fuliza loans are recovered from M-Pesa automatically while M-Shwari borrowers may have to be prompted to pay the debt and this means they can still hold money in their M-Pesa wallet and transact even when they have a loan.
The structure of Fuliza relative to M-Shwari makes it ideal in curbing defaults.
The increased use of Fuliza earned Safaricom Sh2.15 billion as revenue, representing a 60.7 percent increase on the Sh1.34 billion it earned a year earlier.
Fuliza allows customers to complete M-Pesa transactions when they have insufficient funds.
Subscribers who do not settle their Fuliza overdrafts within 30 days are barred from using their unused credit limit until they pay the outstanding amount.
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The uptake of Fuliza deepened in a period that saw the economy shed 2.23 million jobs, leading to reduced cash.
Workers on payroll or business dropped from a peak of 18.1 million in December to 15.87 million in June, reflecting significant business disruptions in the wake of the pandemic.
Companies started reporting falling sales ahead of Kenya imposing restrictions covering travel, mass gathering and a dusk-to-dawn curfew to curb the spread of the coronavirus.
The restrictions were imposed on March 25 and on July 6 the government announced a phased reopening of the economy, lifting restrictions on travel in and out of Nairobi and Mombasa as well as allowing air travel to resume.
Those who do not qualify to borrow at least Sh2,000 on the monthly loan product have been relegated to Fuliza, which is more expensive. Borrowers pay a facility fee of 7.5 percent for M-Shwari loans, amounting to an annualised interest rate of 90 percent.