Businesses tap Sh13 billion Fuliza ya Biashara loans in five months

Safaricom CEO Peter Ndegwa

Safaricom CEO Peter Ndegwa during the announcement of the company’s 2022-2023 financial result at the Michael Joseph Centre in Nairobi yesterday. 

Photo credit: Pool

Businesses tapped Sh13.3 billion from Safaricom's Fuliza in five months to September, pointing to the sharp rise in popularity of the facility that was previously only open to individuals.

Safaricom on May 4 partnered with KCB Bank Kenya to roll out Fuliza ya Biashara, a service allowing business owners to access unsecured credit by overdrawing on M-Pesa business tills to smoothen short-term cash flow glitches.

KCB says in the latest update on the service that businesses accessed Sh13.3 billion, increasing the profile of Fuliza that had since its launch in 2019 been only for individuals seeking to complete payments when they have insufficient funds in their M-Pesa wallet.

The new product’s disbursements followed the Sh23 billion overdrafts and retail financing loans that KCB also advanced to businesses via mobile phones.

Safaricom’s Fuliza ya Biashara facility allows overdrafts of between Sh1,000 and Sh400,000, with an interest-free period of two days. Business owners are allowed to draw multiple overdrafts for as long as it is within their limits.

KCB and Safaricom said during the roll-out that the product would give Kenyan entrepreneurs the headroom to scale up their operations without getting into the danger of not servicing some of their critical needs such as payments to suppliers. Customers incur a two per cent disbursement fee and a daily maintenance fee of between Sh12 and Sh250 for up to 29 days, depending on the amount tapped.

The business overdrafts pushed the total value of mobile loans issued by KCB in the nine months ended September to Sh245.2 billion, translating to a 27 per cent jump from Sh193.1 billion in the preceding similar period.

Personal Fuliza overdrafts underwritten by KCB rose by 69 per cent to Sh150.3 billion as KCB-M-Pesa loans grew by one per cent to Sh33.8 billion. Loans via KCB mobi loans rose by 60 per cent to Sh24.8 billion.

Mobile loan uptake in Kenya has been on the rise with Safaricom riding on its M-Pesa platform to partner with banks such as KCB, NCBA, and Equity in offering various products.

Fuliza overdrafts are designed in a way that repayments are automatically deducted from M-Pesa, ensuring there is a low default rate.

Under Fuliza ya Biashara, the overdraft limit is reset every time a repayment is made, enabling business owners to immediately access new overdrafts including the amount they just repaid. The limits are raised or lowered based on transaction history and repayment of Fuliza.

Deductions towards repaying the overdraft are automatically made from collections made to the till every 30 minutes of the hour. Defaulters risk being listed