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M-Shwari deposits hit Sh571.1bn on increased savings

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A man stands next to an M-Shwari poster in Nairobi. FILE PHOTO | NMG

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Summary

  • Customer deposits in mobile phone account M-Shwari hit Sh571.1 billion as Kenyans increasingly turned to the service for savings and borrowing.
  • The deposits, which rival savings held in top banks, rose 78.5 percent from Sh320 billion reported the previous year.
  • The growth means that Kenyans on average deposited Sh687.95 million daily in their M-Shwari savings accounts— reflecting a growth of 2.3 times from the Sh292.05 million daily savings posted in the preceding financial year.

Customer deposits in mobile phone account M-Shwari hit Sh571.1 billion as Kenyans increasingly turned to the service for savings and borrowing.

The deposits, which rival savings held in top banks, rose 78.5 percent from Sh320 billion reported the previous year.

The growth means that Kenyans on average deposited Sh687.95 million daily in their M-Shwari savings accounts— reflecting a growth of 2.3 times from the Sh292.05 million daily savings posted in the preceding financial year.

“An increasing number of Kenyans are making use of this service, as indicated by the fact that deposits have more than doubled over the last four years,” says Safaricom in the latest sustainability report.

The latest level of M-shwari deposits is 2.7 times more than the Sh213.4 billion that was in the mobile money accounts at end of March 2018.

The M-Shwari deposits were above the Sh569.27 billion and Sh431.44 billion savings in KCB Bank Kenya and Equity Bank Kenya, respectively at the end of March or the Sh330.09 billion that was in the safes of 21 small banks by end of December.

Kenyans stepped up the savings in the period they cut on borrowing via M-Shwari by 27 percent to Sh94.5 billion meaning they have now saved six times more than they have tapped loans.

The product had 3.977 million active customers by end of March, a drop from 4.66 million in the previous similar period last year, coinciding with the decision to raise the minimum loan on the platform from Sh500 to Sh2,000 in August last year.

M-Shwari, launched in November 2013, is a mobile savings and loan service offered to M-Pesa customers that enables them to open and operate an account through their mobile phones.

The service also offers an additional feature called M-shwari lock savings account that allows customers to save for between one and 12 months, earning interest of up to six percent per year.

The six percent interest earned on M-shwari savings is higher than the average 2.64 percent that banks’ savings rate in August and only beaten by 0.3 percentage points by the 6.3 percent deposit rate the lenders were offering high-value savers.

M-Shwari loans are priced at nine percent— being loan fees of 7.5 percent and 1.5 percent excise duty—and disbursed instantly to customers’ M-Pesa accounts once an application is made.