Safaricom, NCBA Bank & KCB Bank lower Fuliza charges by up to 40%

Safaricom's Fuliza service has announced a significant reduction in daily charges for loans below 1000 Kenyan shillings by up to 40% and the introduction of a three-day grace period for repayments. The collaboration between NCBA Bank, KCB Bank, and Safaricom aims to ease the financial burden on borrowers using Fuliza, a service that has seen a 30.7% increase in borrowings in the first half of 2021. James O'Anjagi, a Principal Consultant at Erickon Limited, emphasized the importance of this announcement and its potential impact on the borrowing culture in Kenya. The reduction in charges is expected to make borrowing through Fuliza even more accessible, potentially leading to an increase in borrowing activity. Since its launch in January 2019, Fuliza has become a vital financial tool for many Kenyans, contributing significantly to Safaricom's revenue growth. The 1% access fee for all borrowings remains unchanged, ensuring that the service remains sustainable. O'Anjagi expressed his concerns about the rising trend of Fuliza borrowing, attributing it to economic challenges such as high food prices and unemployment. He noted that the ease of borrowing through M-Pesa and the widespread availability of Fuliza within the M-Pesa platform have made it a convenient option for individuals in need of quick financial assistance. Despite its popularity, a report by Deloitte and data company EQ revealed that a significant number of M-Pesa users regret signing up for Fuliza, primarily due to the strict repayment conditions. Default rates on Fuliza payments are low, with a repayment rate of 98.4% in 2020-21, indicating the high level of accountability among borrowers. The partnership between Safaricom, NCBA Bank, and KCB Bank highlights the continued evolution of financial services in Kenya, blurring the lines between telecommunications and traditional banking. While the reduced charges and grace period offer relief to borrowers, concerns remain about the long-term impact of a credit-driven culture and the need for responsible borrowing practices. As Fuliza continues to reshape the lending landscape in Kenya, stakeholders will closely monitor its influence on consumer behavior, financial inclusion, and overall economic stability.