A recent report from MicroSave, a microfinance impact research firm says Safaricom and CBA’s new M-Shwari service, a mobile phone operated bank account allowing Safaricom subscribers to save money and get loans is not a magical to expectation.
According to MicroSave, M-Shwari’s savings are utilised by high income users to evade the limits on saving on M-PESA and the small loan facility only accessed by lower-income customers. The firm says of the clients it interviewed, just one had been approved for a loan larger than Ksh 2,500 (US$ 28.74) from the minimum Ksh 1000 ($10.49).
The users are also confused on how the credit limits are decided by the system and therefore according to the research the Ksh 2.8 billion (US$ 32.2 million) deposited in the first three months after its launch might have been so as customers were depositing and withdrawing to test how the credit appraisal algorithm or the system works.
MicroSave says the clients demand for more transparent credit appraisal and approval process and would appreciate real-time feedback via SMS, the larger loan sizes and longer terms for micro entrepreneurs are small, there should be away to help savers accumulate value than easily withdraw, freezing deposits in M-Shwari when one has an outstanding loan should be stopped and clients need informed customer service.
Read the full report here.