Safaricom’s overdraft service Fuliza is proving to be a key revenue growth driver for the company, alongside the M-Pesa mobile money service it is tied into and mobile data. East Africa’s most profitable firm on Thursday, May 12 announced its results for the full year ended 31st March, 2022.
The company’s revenues rose 12.3% year on year to hit Ksh281.1 billion. Safaricom’s profit after tax declined 1.7% to Ksh67.4 billion on the impact of Ksh4.66 Billion financing costs for the expansion to Ethiopia.
M-Pesa revenues grew 30.3% to Ksh107.69 billion. 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.
By Business today