Businesses tapped a Sh6.2 billion Fuliza overdraft in two months to June, pointing to the popularity of the improvement to Safaricom’s M-Pesa facility that was previously only open to individuals.
Safaricom on May 4 announced a partnership 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 cover short-term cash flow shortfalls.
KCB says in the latest update on the service that businesses accessed Sh6.2 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.
Safaricom’s Fuliza ya Biashara allows overdrafts of between Sh1,000 to Sh400,000, with an interest-free period of 24 hours.
For amounts outstanding beyond 24 hours, customers incur a two percent daily access fee for up to 29 days. Business owners are allowed to draw multiple overdrafts for as long as it is within their limits.
The business overdrafts pushed the total value of mobile loans issued by KCB in the half year ended June to Sh154.3 billion, translating to a 69.6 percent jump from Sh91 billion in the preceding similar period.
“Our widely accessible mobile financing solutions augment our efforts to support households and small businesses to bounce back stronger,” said KCB.
Personal Fuliza overdrafts underwritten by KCB rose from Sh57.7 billion to Sh98.2 billion even as KCB M-Pesa loans retreated from Sh23 billion to Sh21.3 billion.
Loans via KCB Mobi loans rose by 60 percent to Sh16.1 billion while digital overdrafts and retailer financing closed at Sh12.5 billion.
Mobile loan uptake 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.
