Safaricom Raises M-Shwari's Minimum Loan Limit to Ksh 2000

Kevin Namunwa | Aug 12, 2020

Kenya’s leading telco Safaricom has raised the minimum loan size on the mobile lending platform M-Shwari to Ksh 2,000.

In collaboration with NCBA, Safaricom has raised the minimum loan limit on M-Shwari to reduce defaults largely by borrowers taking smaller amounts. The minimum limit at the mobile lending platform has been Ksh 500.

The changes took effect on Monday and NCBA has started communicating the new credit limit to customers who qualify for it.

Borrowers who look to take loans worth low than Ksh 2,000 are left with Safaricom’ other lending platform, Fuliza.

The interest rates in the two lending platforms are different with Fuliza’s limit higher if the borrower takes longer to repay the loan.

M-Shwari loan borrowers pay a facility fee of 7.5% which amounts to an annualized interest rate of 90%. Fuliza, on the other hand, charges a fee of 1.083% daily which translates to a 395.2% annualised fee.

This means a borrower who used to part with Sh56.25 for a Ksh 1,000 M-Shwari loan will now be set back Sh243.68 for a Fuliza debt that lasts a month.

According to NCBA Group managing director, John Gachora, the bank’s analysis has shown most customers seeking credit Ksh 2,000 were for unplanned expenditures. The raised M-Shwari limit, therefore, is meant to migrate such customers to Fuliza.

As quoted by Business Daily, Gachora said the changes will bring a clear product differentiation for borrowers seeking digital loans through Fuliza, M-Shwari, or Stawi products in which the lender participates.

“Customer qualification for M-Shwari, Stawi, and Fuliza will depend on the individual performance on mobile money, saving and on the observed repayment behaviour on all digital loans that they use,” he said.

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