Fuliza edges rivals to get a firm grip on micro loans
Safaricom’s popular Fuliza overdraft facility has edged other digital credit providers out of the microloans market segment.
Safaricom’s popular Fuliza overdraft facility has edged other digital credit providers out of the microloans market segment, disclosures by the competition watchdog show.
A credit market inquiry by the Competition Authority of Kenya (CAK) revealed that other digital credit providers have been gradually exiting the microloan segment in the backdrop of Fuliza’s entry into the market.
“While M-Shwari is the loan product most commonly used, Fuliza recorded the most active users, demonstrating its rapid expansion since being launched in January 2019. During this period, every other provider’s loans grew in size, suggesting a degree of market segmentation took place,” the CAK report observes. Between January 2019 and March 2020, the entry of Fuliza shook up the digital credit market as the platform’s disbursements grew by 232 percent in the period while the value of total disbursements grew by 213 percent over the same period.
Out of five other digital credit providers assessed in the survey, three saw a decline in the number of loan facilities disbursed while two had a slump in the total value of disbursements.
All five digital credit providers marked an increase in the average size of loans by between 20.35 percent and 73.16 percent after which the average loan size increased to between Sh4,440 and Sh11,109.The Fuliza loan size comparatively stood at Sh642.4, a 5.6 percent dip.
In the six months to the end of September last year, the value of Fuliza disbursements rose 32.8 percent to Sh419.2 billion up from Sh315.6 billion as the number of distinct users hit a high of 7.5 million according to the latest disclosures by Safaricom.
The average ticket size of disbursements on Fuliza fell 18.7 percent to Sh260.70 from Sh320.90.
Safaricom’s earnings from the platform dipped 40.3 percent to Sh2 billion from Sh3.4 billion following a tariff reduction in September 2022 aimed at increasing the usage of the product by customers.
Fuliza allows M-Pesa customers to complete mobile money transactions even when they have insufficient funds in their accounts. The platform is co-run by Safaricom and lenders NCBA and KCB.
The trio dominate the digital credit market landscape which includes other products; M-Shwari and KCB M-Pesa.
