Safaricom, NCBA split on cutting M-Shwari charges

Safaricom, NCBA split on cutting M-Shwari charges

NCBA Group #ticker:NCBA has differed with its partner Safaricom #ticker:SCOM over the push to lower the customer charges on M-Shwari loans amid pressure for the State to curb unregulated digital mobile lenders who charge exorbitant monthly interest rates.

The bank said there were no immediate plans to cut the fees linked to M-Shwari, adding that it’s focused on making the digital loan competitive relative to similar products in the market place.

This contradicts an earlier statement made by Safaricom that it was keen to the cost of M-Shwari cut as part of a larger plan that will see more features added on the M-Pesa platform, including insurance and wealth management.

NCBA runs the M-Shwari app in partnership with M-Pesa and offers a maximum of Sh50,000 loan for up to 30 days with a "facilitation fee" of 7.5 percent on credit regardless of its duration.

"We have never said that we are reducing the rate of M-Shwari," NCBA group managing director John Gachora told the Business Daily in an interview.

"I think there have been comments about the rate that were made by our partner (Safaricom), not by NCBA. I do not think there have been any such plans."

Safaricom’s push for lower M-Shwari and M-Pesa overdraft facility, Fuliza, charges coincided with the proliferation of unregulated micro lenders in response to the growth in demand for quick loans, which have left borrowers with high interest rates.

"We would like the cost of this lending to come down and Safaricom is working to that end. It’s a regulated activity, certainly we will push to find ways to make it cheaper," Safaricom said earlier.

The Fuliza overdraft facility, which was launched in January last year, provides M-Pesa users with top-up loans whenever they need to make a transaction but find they lack enough money in their mobile cash wallets.

For instance, those borrowing Sh1,000 on Fuliza pay a one-off of one percent or Sh10 and a daily charge of Sh10.

This translates to a monthly charge of 31 percent or an annualised fee of 372 percent — way above the maximum regulated annual bank interest of 13 percent.Market leader M-Shwari, Kenya’s first savings and loans product introduced in 2012 by Safaricom and Commercial Bank of Africa, which is now NCBA Bank after merging with NIC, charges a "facilitation fee" of 7.5 percent on credit regardless of its duration.This pushes its annualised loan rate to 395 percent.Scores of unregulated microlenders have invested in […]

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