Telecoms operator Safaricom has been ranked as the most valuable brand in Kenya at $970 million (Sh105 billion) by London-based consultancy Brand Finance.
While it is the largest telecommunications provider in Kenya it is also one of the most profitable companies in the East and Central Africa region due to the exorbitant charges on its overdraft loans like Fuliza and Mshwari.
Detailed by one Patricia Angela Koki (@kawkeytrish), Safaricom has managed to make millions and millions in exorbitant interest charges on their Fuliza overdraft scheme. According to her, In the Safaricom website under FAQs for fuliza the telco states that you will be charged a one off interest rate of 1.083pc and a daily administrative fee on the outstanding balance ranging from KES 2-30 for a limit of 0-70k, this she says is wrong and very misleading.
“In essence, what that really means is that while a bank will give you an annual rate of not more than 13.6pc (currently the highest by Jamii bora bank as per CBK website June report), Safaricom will give you an annualized rate of 395.2pc per year,” she writes.
“Compare this with their other products like Mshwari that charge 7.5pc standard fee (not revolving on outstanding balance like fuliza) which is essentially around 90pc per year (still high but incomparable by a long shot).”
What does this mean in terms of numbers? If you borrow Sh1000 from Mshwari you’ll pay back with around Sh56 bob interest while If you borrow the same Sh1000 with fuliza you’ll part with around Sh244 bob and that is if both debts last only 30days.
“Safcom’s fuliza is no different from all these digital lending apps that are all over Kenya burdening the majority of Kenya’s poor with debt that can only be classified as slavery now. That’s why big papers like financial times call this ‘perpetual debt in the silicon savanna’.” She concludes.
The telco enjoys no regulation as it doesn’t fall under the Kenya Bankers Association meaning they can inflate the interest rates without any repercussions in the long run, and then celebrate contributing up to 6pc of the GDP at the expense of gullible Kenyans.
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