Robert Collymore, CEO of Safaricom, Kenya’s biggest telecom’s operator said the company acquired one million new users for its new overdraft feature on the M-Pesa platform in just eight days, a feat that surpassed his expectations.
M-Pesa, which started 11 years ago as a service to allow Kenyans without access to the banking network to transfer money through cellphones, now offers loans and savings in conjunction with local banks, as well as merchant payments services.
Kenya’s Safaricom part owned by Vodacom and Britain’s Vodafone, launched the new overdraft feature called Fuliza.
In an interview, Collymore said “we got a million [customers]by day eight and by day eight we had lent $10 million. Now we are probably at $15 million. If you don’t have enough cash, you simply draw down from the overdraft and you keep drawing down until you have got to your overdraft limit, which is predetermined by an algorithm”.
Fuliza is underwritten by Kenyan lenders KCB Group and CBA Group, which already had partnerships with Safaricom to offer short-term loans on the M-Pesa platform.
With about 20 million active users in Kenya, M-Pesa has become the principal driver of profit growth for Safaricom in the East African country, as revenue from traditional voice and text services has waned.
As the market leader with 65 percent of mobile phone users, or 30 million subscribers, Safaricom has long been disturbed by regulatory proposals to clip its wings to boost competition.The Communications Authority is finalising a report on competition, which among other things seeks to control Safaricom’s ability to set its retail prices, curb its marketing expenditure and force it to share its extensive infrastructure with the other operators, to level the playing field.