M-Shwari, the mobile lending service operated by Safaricom and the NCBA bank, has raised the minimum loan limit one can borrow from the original Ksh 500 to ksh 2,000. This means that the lowest amount anyone can borrow is now set to Ksh 2,000 by default and there is no way to get any amount below that.
According to Business Daily, the changes took effect on Monday and NCBA bank has been communicating this new credit limit to customers who qualify. Safaricom is yet to officially communicate this since M-Shwari is accessible through its M-Pesa service and one would have thought it was up to them to communicate such changes.
With the raising of the minimum loan limit, those who do not qualify to borrow Ksh 2,000 will be pushed to use the Fuliza overdraft facility. This will be the option to use and this may not settle well with some people as the service is more expensive compared to M-Shwari.
On M-Swari, the facilitation fee is 7.5% of the amount borrowed while on Fuliza it is 1.083% per day. In this case, if one was to borrow Ksh 1,000 from either of the two services, they would be required to pay back the Ksh 1,000 after 30 days and the interest on top will be Ksh 56.25 if they are to use M-Swari. If they are to use Fuliza, they would be required to pay back the Ksh 1,000 they borrowed plus Ksh 243.68 if they end up with the Fuliza debt for a month. That is a big difference if you ask me.
NCBA speaking to Business Daily says the move is to differentiate the two products but this might end up taking more money from borrowers. Fuliza is more expensive to begin with and the way money is deducted to repay the debt is done so quick when you receive money in your M-Pesa account even before you decide on what to do with it. Given that customers are not presented with a choice if they want quick loans under Ksh 2,000, this will not settle well with most of those using the service as of now.
NCBA says that most of those who borrow below Ksh 2,000 need it for unplanned credit and that is why they are shifted to use Fuliza. Maybe they have seen these people pay back the amount owed faster as the interest rate is calculated daily and most do not want to end up with huge debts that they struggle paying back.
Now Read: How Fuliza, Safaricom’s Overdraft Facility, Works
