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The irresistible urge to borrow using Safaricom’s overdraft service Fuliza comes with regret with many citing debt burden that comes with it, a new survey says.
Joint findings by consultancy group Deloitte and data firm DataEQ showed M-Pesa loans dominated the conversation on the social media platform, Twitter, with many borrowers regretting.
“While the bulk of neutral Twitter conversation pertained to comments about transactions and vendor promotion, some themes that had lower volumes of conversation were more emotive. For example, consumers frequently referred to the increase in loan uptake in Kenya, with many expressing regret in signing up for Fuliza loans” the report says.
“Other consumers claimed that their limits were too low and questioned whether Safaricom trusted them to pay back higher values of short-term loans” it added.
Goods and services
Fuliza enables Safaricom M-Pesa customers to send or pay for goods and services up to a certain amount beyond their account balance, which has grown rapidly within the country since its launch in 2019.
The fee on Fuliza is 1.083 per cent daily or 395.2 per cent annualised, underlining the high cost of using the short-term credit services regularly. The latest data by Safaricom reveals that in the year to March 2022, Kenyans borrowed Sh503 billion through Fuliza or Sh1.37 billion daily. The amount disbursed through Fuliza rose by 43 per cent between March 2021 and March 2022, Safaricom reported.
The report said DataEQ tracked over 330,000 Twitter posts mentioning seven leading Kenyan banks, in the research on feelings about delivery of banking services. It showed that in 2021, the Kenyan banking industry experienced more negative conversation (21.4 per cent) on social media than positive (13.8 percent), resulting in an industry overall Net Sentiment score of -7.6 per cent.
On M-Pesa in particular, it said customers also complained of high charges involved in transactions, with 63.7 per cent of them expressing negative sentiments and only 2.8 per cent sharing positive comments.
“Despite acknowledging the convenience offered by M-Pesa, Kenyan consumers expressed unhappiness around how quickly the fees and related charges add up and developed workarounds,” it stated.
This adds to other concerns such as downtime experienced during month-ends, causing disruptions at a time when many Kenyans conduct transactions.