Kenyans borrowed Ksh 1 billion daily on Fuliza overdraft facility during the pandemic period

More Kenyans utilized Safaricom’s Fuliza overdraft facility during the pandemic period than any other time in the history of its existence. According to statistics released by the mobile service provider, subscribers who utilized the feature, more than doubled in the months of January through June when the pandemic was at its worst period affecting a number of households in the country.

Kenyans borrowed a massive KS. 176 billion from Fuliza in the same period compared to KS. 81 billion before the corona period totaling to KS. 967 million a day. The effects of the virus resulted in massive job losses across the world and in Kenya particularly, most businesses experienced almost zero or negative revenues due to the lockdown.

A reported number of close to two million Kenyans lost their jobs during the period, as expected, more Kenyans resorted to loans in a bid to make ends meet. MPESA has particularly become more preferred platform to acquire quick loans as there aren’t many restrictions compared to banks and other financial institutions.

Fuliza is an overdraft loan facility that allows MPESA users to access funds even when they don’t have anything on their MPESA balance, in return, the amounts due are automatically deducted from their MPESA whenever someone receives cash.

According to Genghis Capital analyst Gerald Muruiki, consumers as well as companies tent to opt for overdrafts whenever cashflows are hit. Muruiki therefore attributes the increased loan uptake during the first half of 2020 to the pandemic. He further explains that Fuliza is easily manageable than conventional loans which have had a number of defaults. The facility is integrated inside MPESA and this generally makes it easier to manage according to Muruiki.

Fuliza overdraft facility is managed by both KCB Group and NCBA who also have loan partnerships with the mobile service provider with NCBA disclosing it had offered a total of Ksh. 132 billion through Fuliza while KCB had given out Ksh. 44 billion during the first half of the year.