Airtel Kenya targets M-Shwari with new mobile loan service

Airtel Kenya subscribers will access loans and make repayments through their phones within the next two months. FILE 

By MARK OKUTTAH

In Summary

Airtel Kenya subscribers will have a new platform to access loans and make repayments through their phones within the next two months.

The mobile phone operator will introduce another loans product in partnership with a Mauritius-based consumer credit firm AFB, which signed the pact with the telco last year.

This is the latest in a series of mobile-based micro credit services seeking to tap millions of unbanked users, with the telecommunications firm earning a fee from interest paid on the loans.

Safaricom in partnership with Commercial Bank of Africa is offering small loans under the M-Shwari product and Airtel is looking for a larger share of this business given that it has a pact with micro lender Faulu Kenya.

The interest rate in the new service will be made public in the next few weeks when it is launched officially, said an Airtel executive.

“The launch will happen by March and we are now negotiating the interest rates,” said the executive who requested anonymity.

An M-Shwari loan is payable within 30 days at an interest rate of 7.5 per cent. CBA is estimated to disburse 24,000 M-Shwari loans every day valued at about Sh7.3 million. AFB will be lending Airtel subscribers between Sh2,000 and 30,000 payable over a period of six months.

AFB is targeting the more than five million Airtel subscribers to grow its loan book while Airtel anticipates that the partnership will help it grow and acquire new customers for its money transfer services.

READ: M-Shwari drives increase in bank accounts to 18m

On Monday, Airtel started an SMS marketing campaign ahead of the official launch. “Need a cash loan? You may soon qualify for an instant loan of up to Sh5,000. Another first from Airtel Money to loyal customers,” read the text messages.

The loan will be offered to customers without security, with savings, airtime consumption patterns and use of Airtel’s money transfer service being tools of credit appraisal.

Safaricom’s M-Shwari, which was launched 14 months ago, requires savings on the account before credit is advanced.

Airtel Kenya managing director Shivan Bhargava earlier said the AFB and Faulu partnerships differ but declined to provide further information, saying this would be made public at the launch. 

In the Faulu partnership, subscribers to Airtel Money get loans ranging between Sh100 and Sh10,000 through their handsets. The loans are repayable after 10 days.