Kenya’s President Dr. William Ruto has hailed Safaricom’s move to reduce Fuliza interest charges to 50 per cent
President Dr William Ruto who was present at the press briefing event at Fairmont The Norfolk Hotel said ” The announcements you have made here are very positive and in the right direction. I am very confident that by walking this journey in the direction you have started, we will get to the correct destination.”
Starting October 1, 2022, customers will be freed of daily maintenance charges for transactions below Sh1,000 in the first three days of borrowing.,
Safaricom Chief Executive Officer Peter Ndegwa said“ for the first three days, customers will not have to pay a daily maintenance fee which they pay today.”
Mr.Ndegwa also announced a 50 per cent interest reduction for transactions below Sh1,000, a move that will see customers enjoy reductions in daily maintenance fee for transactions above Sh1,000 up to Sh70,000.
Fuliza allows customers to overdraw on their M-Pesa account when they have insufficient funds to complete a transaction. Since its launch in 2019 by Safaricom, NCBA Group, and the Kenya Commercial Bank Group, Fuliza has risen to Sh1.58 billion daily borrowing, indicating a sharp increase in the use of the service .
The amount of cash disbursed on Fuliza hit Sh288 billion in the first half period up from Sh220.38 billion in the same period last year.
The small loan facility has emerged as a leading mobile loan, disbursing Sh1.5 billion daily.
According to NCBA Chief Executive Officer John Gachora , the borrowing data showed that the original intention of Fuliza was not being achieved.
He said “ during the Covid-19 pandemic, there was a surge in the number of customers accessing credit and from the data, it is clear the original intent for Fuliza to be a short-term facility for four to seven days has evolved. Many customers’ M-pesa wallets are now remaining overdrawn for 14 to 19 days on average.”
The aim of reviewing Fuliza is to amend it back to its original purpose. With the right use of Fuliza, customers will see a benefit in the cost of credit and borrowing experience.” Mr.Gachora added.
Loans between Sh2500 to Sh70,000 have been handed a 16.7 percent price cut from Sh30 daily to Sh25.
Safaricom will maintain the Fuliza access fee at 1 per cent including for transactions below Sh1,000, the changes in the review would cumulatively lead to a 50 per cent overall reduction in Fuliza tariffs.
The President has urged Safaricom, NCBA, KCB to come up with a loan scheme for SMEs with interest rates below 10pc daily as SMEs employ almost 80 per cent of Kenyans and yet they are constrained by access to credit.
The President is advocating for a product where SMEs will borrow at interest rates below 10 per cent daily as this will enable Kenyans borrow and double their businesses.
I am willing to work with you in a public-private engagement so that we can mitigate some of the risks that come with lending to that category of Kenyans,” Ruto said.