This archive report was first published on 2 November 2019.
Published on November 2, 2019, Kenyans have tapped Ksh.140 billion from Safaricom's Fuliza overdraft service in just under nine months of operations.
The increased demand for the service has supported Safaricom's M-Pesa revenues, raking in Ksh.1.6 billion in earnings for the telco since its early January launch.
Subsequently, Fuliza anchored the elevated contribution of new business to M-Pesa growth, with lending by Safaricom increasing by 100 percent in six months to September 30.
At the same time, the new business saw the continued evolution of Safaricom's revenue profile, with mobile-money service earnings edging closer to revenues from voice, whose contribution depreciated further in the period to 34.7 percent.
The rise of Fuliza served up resilience for mobile-money earnings, overriding a 15.5 percent revenue swing from the slowdown in gaming activity on the back of the government crackdown on the betting industry.
As such, total M-Pesa revenues maintained growth at 18.2 percent year over year to soar to Ksh.41.97 billion in the review period.
Safaricom Acting Chief Executive Officer Michael Joseph attributed the success of Fuliza to its effectiveness in supporting customers, saying, 'As a product, it really works well for us and hence we would expect to see growth in the service.'
The performance of Fuliza rivalled that of banks, showing off the weighted potential of digital lending as a disruptor to the dissemination of financial services in the country.
According to analysis, funds disbursed on Fuliza outpaced the loan book growth of any one individual bank, surpassing issuance by the closest lender by 2.4 times.
Combined, tier one banks pushed out a total of Ksh.156.7 billion in new customer loans over six months, leaving a shortened margin of Ksh.16.7 billion to disbursed funds on the Fuliza overdraft service alone.
While Fuliza has worked to deepen access to financial services, the service has been criticized for saddling Kenyans with more debt.
Michael Joseph acknowledged the raised concerns, saying, 'It is true there is a merry go round of borrowing. This products have helped people but I fear they are on the verge of falling out of control.'
He added, 'We would want to play a part in building responsible borrowing. My immediate concern would be on making Fuliza more affordable.'
