Safaricom has been making baby steps into partnerships lately, with CEO Bob Collymore saying the telecom is planning on more collaborations in its growth journey and now in a new agreement with the Kenya Commercial Bank (KCB), the two have launched a joint M-Pesa account to facilitate lending among its customers.
Similar to the M-Shwari offing but different in terms of flexibility in repayment periods and interest rates, the new product by KCB and Safaricom intends to become a leader the mobile banking sector by offering M-Pesa customers an opportunity to borrow more money than they have been able to do through M-Shwari.
Dubbed KCB M-Pesa, the new money lending product that comes to rival CBA’s (Commercial Bank of Africa) M-Shwari, will allow customers to borrow money from their accounts through their mobile phones with amounts of up to KSh1 Million and as little as KSh50 that will be payable in full or in installments over a period of up to six months.
Repayment period will be spread out over the six months, with installments rates of as low as 2 percent being made over periods of one, four and six months and this interest will be imposed during the processing of the loan, meaning that the money coming into the borrower’s KCB M-Pesa account will be less than that requested.
Eligibility for the various amounts of money to be lent will depend on the transactions activity of customer on their M-Pesa wallets as well as the current savings in their KCB account, in the case the borrower has one.
Customers of the new service will also be given an opportunity to put their money in either a fixed savings account that will generate interest ranging from 3 to 6 per cent per annum for money saved between one and 12 months, a move that aims to promote a saving culture among users.
The product will require Kenyans to dial the code *844#, after which the user will be tasked to accept terms and conditions (the kind no one ever reads), register and later proceed to borrow the amount they would want or are qualified for. After registration, the account alerts you on how much money you can borrow.
Not only does it come to rival M-Shwari, the new service comes to be in direct competition with Equity Bank’s loaning facility dubbed Eazzy loan that is offered through the bank’s mobile money platform, Equitel, which provides loans to its customers at 2 percent interest rate – like the lowest KCB M-Pesa interest rate.
M-Shwari recently clinched its 10 million mark in customer base and reports that in a day, about 50,000 loans are processed, with the highest limit in loans currently standing at KSh 8,000 from the earlier KSh 5,000. The CBA loaning facility for M-Pesa customers charges a flat rate of 7.5 per cent.
KCB will now have access to the nearly 20 million Kenyans using the M-Pesa mobile money platform that recently partnered Vodacom’s M-Pesa to allow for users in the two countries to directly send and receive money between the two countries, a first for Safaricom.