Airtel mobile loan deepens telcos’ foray into finance
Airtel Kenya MD Shivan Bhargava (left), and Faulu Kenya MD John Mwara at the launch of the Kopa Chapaa service in Nairobi yesterday. Diana Ngila
Airtel Kenya marked telecommunication companies’ deepening foray into the financial sector with the launch of a mobile phone loan facility in partnership with Faulu Kenya, a microfinance provider.
Subscribers to Airtel Kenya’s mobile phone money transfer service, Airtel Money, will get loans ranging from Sh100 to Sh10,000 through the their handsets as the telecommunications firm seeks to grow revenues by launching new products.
Airtel Kenya will provide the mobile phone money transfer system, while Faulu Kenya be appraising and lending money to applicants.
“We intend to use the partnership to offer our current customers more reasons to transact and also increase our agency footprint to ease access of our service,” said Airtel Kenya’s managing director, Shivan Bhargava.
The loans are repayable after 10 days.
Interest charges range between three and 10 per cent, with higher values attracting lesser costs.
All Airtel money subscribers who have been on the service in the past six months are eligible to apply for loans, in the new service dubbed ‘Faulu Airtel Kopa chapaa Service.’
Borrowers need not be Faulu Kenya customers.
The applicants’ debt-repayment history will be cross-checked with the Credit Reference Bureau (CRB), disqualifying those who are already black listed.
Airtel Thursday said it intends to tap into the vast customer base provided by Faulu Kenya to ease the access of its mobile money services, especially in the rural areas.
Airtel has 6,000 agents across the country against Safaricom’s Mpesa which has more than 35,000.
The majority Indian-owned firm intends to tap into Faulu’s 14,000 agents across the country to tap more subscribers.
Central Bank of Kenya data shows that by December last year, Safaricom had 15.21 million mobile money customers making it the largest mobile money transfer service, followed by Airtel which had 3.16 million customers.
Yu had 520,000 customers compared to Telkom Kenya’s 130,000, MobiKash 110,000 and Tangaza 70,000.
Airtel expects to make money through commissions that it will be charged on withdrawals. Airtel Money charges Sh15 to withdraw Sh100 and Sh75 to withdraw Sh10, 000.
Faulu will seek to make money on the interest charges.
Airtel subscribers will apply for the loan from the convenience of their mobile phones by dialing *305# and following the menu.
Faulu Kenya managing director, John Mwara, said Faulu is exploiting technology to scale up its reach to the unbanked and semi banked by reducing costs of transactions, improving on convenience and ease of access.
“This innovation, when backed by an effective credit reference bureau, will complete mobile banking by ensuring offering of micro deposit mobilisation which Faulu already offers through Airtel money,” said Mr Mwara.
“We have put aside enough cash reserves for this and expect to be transferring an average of Sh1 billion to Sh1.6 billion daily within the next four months and an average of Sh4 billion by the end of the year.”
Corporates included
He added that the Kenya’s rural environment is characterised by poor communications infrastructure, relatively low population density, low levels of literacy and relatively undiversified economies and as such it is only the use of such technology platforms that can increase financial inclusion.
Airtel partnership with Faulu comes on the background of Central Bank of Kenya CBK report that shows that although transfer of money from person to person is still dominant, there is an increased use of mobile phone services by corporates.
Data from the CBK show that in the month of December 2011 alone, M-Pesa moved Sh116.6 billion, miles ahead of Tangaza’s Sh1.31 billion, which is about three times the combined share of the other four rivals for that month.
Airtel Money transferred Sh420 million, Orange and Yu Sh20 million each while MobiKash handled Sh4 million.
