Safaricom has seen a surge in loan demand from merchants using their new overdraft facility with over 73,000 merchants taking the Fuliza loan, where a small business can borrow between Kes1000 and Kes400,000.
The telco CEO , Peter Ndegwa says the product launched just early this month looks promising with the potential to reach the 600,000 merchants using Safaricom till numbers.
Safaricom’s Fuliza product has been very popular for the retail market with about 8 million customers using the overdraft facility regularly.
Last year, Fuliza disbursed Kes701.5 billion a 39.6 percent increase from Kes502.6 billion after Safaricom reduced the cost by up to 50 percent. Higher loan take-up helped mitigate the marginal 8.3 percent dip in revenues to Kes5.4 billion.
Safaricom now wants to target businesses with this short term facility with the potential to take larger ticket sizes sustainably.
“We are already supporting merchants with an overdraft and loan product that we will launched recently. 73,000 of our 600,000 merchants have already opted in to the product,” Mr Ndegwa said.
Small businesses have become the new frontier of micro loans to manage cash flow constrains targeted by both the private sector and government through solutions such as Stawi loans and Hustler Fund for SMEs.
Kenya has over 7.4 million micro, small and medium enterprises (MSMEs) majority (94 percent) of who are unlicensed micro firms which means it is hard to get credit information on them to make lending decisions.
However the small businesses have been taking small loans via mobile phones and building a credit history to allow lenders give them loans and in Safricom’s case have demonstrated cash flows through the telco’s merchant till numbers that can support its overdraft facility.
Fuliza ya Biashara caters especially to small businesses by providing them with instant, affordable credit of up to Kes400,000, empowering them to rapidly respond to their business needs
Small businesses access it when making transactions from a Lipa Na M-PESA Business Till to other Till Numbers and PayBill Numbers, when sending money to an individual, and when withdrawing to the nominated number or at an Agent.
The overdraft is offered on a 2 percent one off fee and a tiered daily access fee after the 24-hour free period.
Fuliza ya Biashara limit is reset every time a repayment is made, enabling business owners to immediately access new overdrafts including the amount they just repaid.
Safaricom is seeking alternative growth areas to stem decline of its voice, messaging and slowing mobile money business.
The telco reported a net profit of Kes52.4 billion for the full year ending March, a 22.4 percent drop from Kes67.4 billion last year.