Kenyan mobile carrier Safaricom is set to launch a new service that will let people on its MPesa platform save and borrow money from their mobile phones.
The network, part owned by Vodafone, developed and launched MPesa a few years back — revolutionizing the transfer of money in the East African country.
According to Business Daily Africa, the new service requires people to open a mobile bank account called M-Shwari. Once they activate the account, they can deposit as little as one Kenyan Shilling (US$0.01) and borrow up to Sh100 000 (US$1 164.82) at a one-off interest rate of 7.5%.
Opening up the account reportedly just requires a few clicks on a person’s phone without having to fill out any of the forms they would with a traditional bank.
“It is simple. There are no ledger fees, no limits on the frequency of withdrawals, no minimum operating balance and no charges on deposits for M-Pesa to M-Shwari account,” Safaricom chief executive officer Bob Collymore told Business Daily Africa.
Despite the fact that the service allows people to take out microloans, Safaricom is pitching the service as a savings tool for Kenyans. While some might criticize the high interest rate and short repayment period, it may actually stop people burrowing themselves into debt. It will also allow those without collateral to get access to what may be very necessary loans.
“M-Shwari will attract a one-time facilitation fee (read interest rate) of 7.5% of the borrowed amount,” Safaricom said in a statement.
While a once-off payment might sound much more difficult to pay off than those that come from banks, it’s worth bearing in mind the amounts being borrowed here are typically much lower than would be borrowed from a large bank.
As is the case with MPesa, Safaricom is offering the service in conjunction with Commercial Bank of Africa (CBA).