Kenyans who use the biggest telco, Safaricom PLC, more than doubled their borrowings from the overdraft service Fuliza in the six months to June when Kenya imposed a variety of measures to flatten the curve of the novel coronavirus including a country lockdown.
In the six months to June, Fuliza loans rose to Sh176 billion from Sh81 billion in the same period a year earlier, representing a daily borrowing of Sh967 million.
The spike was as a result of increased appetite for loans on the M-Pesa-based overdraft platform due to Covid-19 economic hardships which saw the economy shed more than two million jobs and reduced wages for millions more.
“People and businesses go for overdrafts when their cash flows are hit. The economic slowdown in the first half certainly triggered demand for Fuliza loans,” said Gerald Muriuki, a research analyst at Genghis Capital.
“We have seen default rates rising and so the conventional loans have not really gone up. But given that Fuliza is integrated into M-Pesa credit, it is easier to manage the rates of default than conventional loans.”
Fuliza is a baby to KCB Group and NCBA Group, which already had partnerships with Safaricom to offer short-term loans on the M-Pesa platform.
NCBA says it lent Sh132 billion through Fuliza in the six months to June while KCB Group said it gave out loans worth Sh44 billion on the overdraft feature.
Kenyan Business Feed is the top Kenyan Business Blog. We share news from Kenya and across the region. To contact us with any alert, please email us to [email protected]