By Getrude Matayo
Covid-19 has hit hard millions of Kenyans. Stats show that at least 2,000,000 Kenyans have lost their jobs as a result of the Covid-19 pandemic. At the same time, millions of businesses have shut down leaving people with no tangible source of income.
Kenyans are broke. That is the reality on the ground. No source of income means no money and the only way to survive is to either borrow or steal. Stealing is dangerous and, therefore, the only option available for millions of them is to borrow.
It is not easy for a common mwananchi to get a loan from a commercial bank in Kenya. The requirements and the process are just too much to handle. Also, which bank is willing to lend to a Kenyan whose pocket is always yawning with no cash in?
The only available avenue to borrow was mobile loan apps. But millions of them defaulted leading to around 3.5 million of them being blacklisted on the CRB.
The mobile loan apps are also no longer lending. The Central Bank of Kenya is holding them by the balls; they no longer have the powers to blacklist defaulters on the CRB.
Then came FULIZA
Then came Fuliza, a Safaricom’s overdraft service that allows customers to transact more than what is in their M-Pesa wallet. This product has taken over Kenya by storm and the rate at which Kenyans are Fulizaing is just on another level.
The latest stats show that Safaricom subscribers continue to double their borrowings from the overdraft service Fuliza. According to the stats, every second, Safaricom processes six transactions or 492,480 overdraft requests per day to bail our borrowers. This is to say, every second that passes by in Kenya, Kenyans are Fulizaing 492,480 shillings.
The thing with Fuliza is that it is not easy to run away from it unless you just decide to opt-out. Even so, you can only opt-out after clearing whatever you owe. When you have Fuliza, every time you receive cash in your M-Pesa wallet, Fuliza has to first take its cut.
According to Safaricom’s 2020 sustainability report, The Fuliza service continues to register strong growth in both numbers of customers and volumes of disbursements.
According to the company’s report, in the 2020 financial year, Safaricom disbursed loans amounting to 245 billion shillings through Fuliza. This is a growth of more than 10 times over the same period in the previous year when Kenyans borrowed 29 billion shillings.
The jump in the uptake of the loans emerged in a period when the economy shed more than two million jobs on the back of sluggish corporate earnings in the wake of covid-19 economic hardships. Overall, transactions stood at 392 million up from 46 million in the previous financial year with the number of customers registered on Fuliza now standing at 20 million up from 10.7 million in 2019.
Safaricom chief executive officer Peter Ndegwa said the company had provided a crucial lifeline to subscribers following the outbreak of the covid-19 pandemic which had ravaged the economy rendering millions jobless in the process.
“Since March, a good number of Kenyans have worked from home and during this time, Safaricom’s team has ensured our products and services keep our customers connected to their families and livelihoods,” Safaricom CEO said.
In March 2019, Sterling Capital Ltd projected that Safaricom’s Fuliza customers will borrow up to 200 billion shillings in one year, generating 21 billion shillings in revenues for the firm and two million new customers.
The telco has 142,000 residential homes connected to its fiber-optic network, a 32 percent increase from last year according to the report. The firm also recorded a 23 percent jump in smartphones on its network, with 15 million people now using the devices.
Mr. Ndegwa said they have revamped monthly plans to Safaricom Postpay. As of March 31st, 2010, 27,00 customers have registered to the new preposition, the number of customers grew by 3.8 million and their overall market share increased by 2.6 percent.
The Fuliza debt is recovered from M-Pesa balances automatically, but subscribers who do not settle their overdrafts within 30 days are barred from using their unused credit limit until they pay the outstanding amount.
Is Fuliza the financial giant that we never imagined?