Mobile money is big money, especially for Safaricom and their M-PESA customers in Kenya. But many will be surprised at the sheer scale of borrowing using the Fuliza overdraft facility which lets customers continue to make M-PESA payments without any money stored in their wallet. Safaricom’s accounts for the year ending 31 March 2023 state that KES701.5bn (USD4.97bn) was spent using Fuliza during the year. This represents a 40 percent increase in borrowing via Fuliza compared to the year before, an extraordinary rate of growth for a credit facility that was only launched in 2019. The total is comprised of very many small loans in practice; the average Fuliza payment is worth KES298 (USD2.11). Most of this lending was successfully recovered from customers; KES671.6bn (USD4.76bn) was repaid during the year. But this shows how the widespread of popularity of mobile money in a country like Kenya, where over 32 million people use M-PESA each month, and the offer of micro-credit facilities can quickly add up to a total exposure worth hundreds of millions of dollars.
Fuliza is operated in partnership with two commercial banks, NCBA and KCB Bank, so the financial risk is somewhat spread. There was a 4.3 percent shortfall in repayments for the last financial year, but the collection rate for the previous year was 101.5 percent of the amount borrowed, showing that Fuliza customers will generally settle their debts even though the overdraft is offered without asking for any security. Safaricom has an older financial product called M-Shwari which loans larger amounts, averaging KES7,793 (USD55.30) per customer, and has a much worse repayment rate of 61.7 percent over the course of the last financial year. The M-Shwari repayment rate has only declined by a few points year-on-year, indicating the service suffers much worse endemic delinquency, but it also drives a relatively large amount of revenue compared to Fuliza because of the way fees are structured. The total value of lending via Fuliza is almost 8 times the amount lent via M-Shwari, but Fuliza only generates 2.5 times the amount of revenue produced by M-Shwari.
Probably the greatest security for a financial service like Fuliza is that Kenyans would not want to be cut off from their phone or all the other services that they routinely for using M-PESA. Nevertheless, Kenyan journalists speculate that inflation is one of the factors driving the increased use of Fuliza. CPI inflation has been around 8 percent for much of the year, with food inflation often exceeding 10 percent. If Kenyans are relying on borrowing to cover the high cost of food and fuel then there is a risk that fewer will be able to repay what they owe.
