President William Ruto shakes the hand of Safaricom CEO Peter Ndegwa after meeting with the telco and banks executives over Fuliza charges review. PHOTO | DIANA NGILA | NMG
President William Ruto on Wednesday met Safaricom chief executive Peter Ndegwa, KCB's Paul Russo and NCBA's John Gachora moments before the official announcement of revised Fuliza overdraft charges.
Dr Ruto, who appeared unexpectedly at Fairmont The Norfolk Hotel, affirmed at a joint press briefing after the meeting his administration's plan to lower the cost of credit.
"I am happy that you are already walking on the right trajectory. 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," Dr Ruto said.
The telco and its bank partners have revised charges on the popular overdraft facility that was launched in January 2019 to facilitate seamless transactions when one runs out of money.
Daily charges on loans of up to Sh1000 will now come down from Sh10 to Sh5 but the company has retained the 1 percent access fee on all borrowings.
"This affects 80 percent of current Fuliza transitions enabling us to further achieve Fuliza’s true goal of empowering customers to complete transactions in case of insufficient funds. The three-day free daily maintenance fee period will allow customers to complete more transactions while attracting more customers," said Mr Ndegwa.
The upper band of between Sh2500 to Sh70,000 have been handed a 16.7 percent price cut from Sh30 daily to Sh25.
The small credit facility has emerged as a leading mobile loan, disbursing Sh1.5 billion daily.
Borrowings from Safaricom’s overdraft service rose by 30.7 percent in the six months to June this year, underlying the biting cost of living forcing many Kenyans to rely on short-term mobile loans to meet their needs.
Mr Gachora said during the briefing that borrowers are staying longer with the loan than initially planned.
"It is clear that the initial intention for Fuliza to be a four to seven days facility has evolved. Many customers' M-Pesa wallets are now remaining over-withdrawn for 14 to 19 days on average," he said.
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 jump in overdrafts translates to Sh1.57 billion daily borrowing between January and June this year, compared to Sh1.2 billion and Sh972.3million over a similar period of 2021 and 2020 respectively.
Borrowing on Fuliza has been surging since 2020 when the economy was hit by the Covid-19 pandemic leading to massive shedding of jobs affecting household incomes.
aomondi@ke.nationmedia.com
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