It has now emerged that Kenyans tapped Ksh.140 billion from Safaricom’s overdraft service Fuliza in just under nine months of operations.
The increased demand for the service worked to support Safaricom’s M-Pesa revenues in the period since the early January launch to rake in Ksh.1.6 billion in earnings for the telco.
Subsequently, Fuliza anchored the elevated contribution of new business to M-Pesa growth as lending by Safaricom increased by 100 percent in six months to September 30 flanked on the side by a revitalized KCB M-Pesa.
At the same time the new business saw the continued evolution of Safaricom’s revenue profile as the company’s mobile-money service earnings edged closer to revenues from voice whose contribution depreciated further in the period to 34.7 percent.
The rise of Fuliza served up resilience for mobile-money earnings overriding a 15.5 percent revenue swing from the slowdown in gaming activity on the back of the government crackdown on the betting industry.
As such, total M-Pesa revenues maintained growth at 18.2 percent year over year to soar to Ksh.41.97 billion in the review period.
“As a product, it really works well for us and hence we would expect to see growth in the service,” Safaricom Acting Chief Executive Officer Michael Joseph told Citizen Digital in an interview.
Better than banks
The performance of Fuliza rivalled that of banks to show off the weighted potential of digital lending as a disruptor to the dissemination of financial services in the country.
According to analysis of the performance of tier one banks in the first six months of 2019, funds disbursed on Fuliza outpaced the loan book growth of any one individual bank, surpassing issuance by the closest lender by 2.4 times.
Combined, tier one banks pushed out a total of Ksh.156.7 billion in new customer loans over six months to leave a shortened margin of Ksh.16.7 billion to disbursed funds on the Fuliza overdraft service alone.
KCB Group and NCBA however joined the Fuliza party having partnered Safaricom to dispatch the service to earn an estimated Ksh.3.2 billion each based on the operational 40:40:20 revenue sharing ratio between the triad of firms.
While Fuliza has worked to deepen the access to financial services, the service has been sucked into the criticism levelled on other digital lenders as it is too accused of saddling Kenyans with more debt.
In admittance of the raised concerns, Michael Joseph says Safaricom is keen on playing a role in the shaping up of the Fintech disruptor.
“It is true there is a merry go round of borrowing. This products have helped people but I fear they are on the verge of falling out of control,” he said.
“We would want to play a part in building responsible borrowing. My immediate concern would be on making Fuliza more affordable”.
Safaricom describes Fuliza as an overdraft service allowing M-Pesa customers to complete their transactions when they have insufficient funds in their mobile money wallets.
The service charges customers between Ksh.5 and Ksh.30 per day on amounts borrowed with funding ranging from Ksh.100 to Ksh.70, 000.
As at March 30, the overdraft service had availed an estimated Ksh.29 billion to customers having attracted 8.8 million customers to the platform in a little under three months.