2 million Kenyans, or at leat 12 percent of the Kenyans listed in the Metropol Corporation Credit Reference Bureau (CRB) have defaulted on their loans.
This is according to Metropol Managing Director Sammy Omukoko, who says that most of the defaulters are unwilling or unable to service their loans. Most of the borrowers got their loans through digital lenders, including Safaricom’s Fuliza, M-Shwari and KCB-M-Pesa among others.
“We have 19 million Kenyans listed in the CRB, out of which 17 million are eligible borrowers but over 2 million of them are defaulters and therefore cannot access loans from any financial institution,” said Omukoko.
“They take money and throw away their sim cards, get another one, borrow and again destroy the sim cards. Some take the loans but they have no money to repay the loan while others take the loan but before repaying, they lose their jobs.”
Omukoko revealed that most of the borrowers on digital platforms take loans between 2am and 5am, especially in Nairobi and its outskirts.
“There is a lot of online borrowing between 2am and 5am with a majority being Nairobi residents. Upon investigations, we realised that they were small-scale traders at Gikomba market and slum dwellers,” said Omukoko.
The value of disbursements on Fuliza increased from Ksh246.6 billion in 2020 to Ksh351.2 billion in 2021.
On average, Ksh962.2 million was disbursed everyday via Fuliza.
In comparison to Fuliza’s 31% revenue growth in 2021, M-Shwari and KCB M-Pesa – Safaricom’s two other mobile lending products – fell 13.4% and 18.7% respectively.
Ksh94.5 billion was disbursed on M-Shwari in 2021 and Ksh51.1 billion on KCB M-Pesa. It means between Fuliza, M-Shwari and KCB M-Pesa a total of Ksh496 billion was disbursed in 2021.
Fuliza is offered by Safaricom in partnership with NCBA and KCB banks. It allows subscribers to complete transactions on M-Pesa even with insufficient funds in their mobile money wallets.
Subscribers get a Fuliza limit based on their transaction history on M-Pesa. It charges a 1% access fee and a daily maintenance fee of between Ksh2.4 and Ksh36.
While at least 5.9 million used Fuliza in 2021, to cover various expenses, it has attracted criticism from quarters including Central Organization of Trade Unions (COTU) boss Francis Atwoli who described the cost of lending on Fuliza as unjustifiable. M-Pesa transaction charges, considered expensive by many Kenyans, have also been the subject of concern and debate.
The repayment vs disbursal rate on Fuliza stood at 98.4% in 2021. M-Pesa automatically deducts funds sent to subscribers wallets to recover the loans.