In a surprising turn of events, deposits in the popular mobile lending platform, M-Shwari, took a significant nosedive of 44.1 percent during the year ending March, plummeting from Sh745 billion in 2022 to a mere Sh416.7 billion.
This downturn marks the very first decline in deposits since the platform’s inception back in November 2013. This steep drop signifies a substantial shift in Kenyan saving habits. On average, individuals were depositing Sh1.14 billion daily into their M-Shwari savings accounts, showcasing a drastic 50 percent drop from the Sh2.04 billion daily savings observed in the previous fiscal year.
These startling revelations come courtesy of Safaricom’s latest sustainability report. The report also highlighted a 6.3 percent increase in the value of loans borrowed through M-Shwari during the same period, reaching a total of Sh91.5 billion, up from Sh86.1 billion in the previous year.
Interestingly, Safaricom’s overdraft service, Fuliza, experienced a robust 39.6 percent surge in loan disbursements, amounting to Sh701.5 billion, up from Sh502.6 billion in the year ending March 2022.
This shift in consumer behaviour paints a vivid picture of liquidity challenges that have compelled Kenyans to increasingly rely on credit facilities to navigate economic hardships.
M-Shwari, a mobile savings and loan service integrated into Safaricom’s mobile wallet platform, M-Pesa, has played a pivotal role in shaping the financial landscape. It allows users to effortlessly open and manage their accounts directly from their mobile phones. The platform further entices savers with an enticing feature known as the M-Shwari lock savings account, permitting users to save anywhere from one to twelve months, all while earning an impressive annual interest rate of up to six percent.
On the lending front, M-Shwari loans are competitively priced at nine percent, encompassing loan fees of 7.5 percent and an additional 1.5 percent excise duty. These loans are disbursed instantaneously into customers’ M-Pesa accounts once the application process is complete.
Recent data released by the Competition Authority of Kenya (CAK) indicates that M-Shwari reigns supreme among digital lenders in the country, boasting a commanding 34 percent market share. It faces fierce competition from Fuliza, which enjoys a substantial 25 percent market share. The primary use of funds borrowed from both these platforms predominantly revolves around meeting short-term needs such as food purchases and bill payments. Additionally, small businesses have been tapping into these facilities to replenish their working capital and restock their inventories.
In light of these shifting financial trends, it remains to be seen how M-Shwari and similar lending platforms will adapt to the evolving economic landscape in Kenya.