Companies

Telkom plans to take on Safaricom in mobile lending

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Telkom Kenya CEO Mugo Kibati. PHOTO | SILA KIPLAGAT | NMG

Telkom Kenya plans to launch a mobile loans service, joining the lucrative fast-growing market for quick digital credit that does not require collateral.

The loan product to be offered through its mobile cash unit T-Kash has been tested and found to be feasible. The service is set to be launched in partnership with a financial institution, giving Telkom Kenya customers access to instant microcredit via their mobile phones.

“From our interactive sessions with our customers, we have taken note that Kenyans appreciate mobile money solutions better when they keep on finding more reasons to attach value to their mobile wallets, whether they are sending money, paying for goods and services, saving, borrowing or trading,” the telco said in a statement.

“We continue to have these exploratory sessions that will inform and enhance the experience we offer our customers; we will be able to update once the new value proposition is ready for the market.”

Telkom Kenya reopened its T-Kash mobile money service in 2018 after shutting it a year earlier.

The new Telkom loans app will join competitors including KCB Group’s KCB M-Pesa and NCBA Group’s M-Shwari, both operated in partnership with Telkom Kenya’s rival Safaricom.

Market leader Safaricom also operates the Fuliza overdraft facility, which was launched on January 5, 2019, in a partnership with Commercial Bank of Africa (now merged into NCBA) and KCB Group.

Launched in 2012 on the Safaricom mobile money application M-Pesa, M-Shwari has become a key growth driver for both Safaricom and NCBA. KCB M-Pesa, on the other hand, was launched in March 2015.

Safaricom dominates the mobile loans segment where borrowers get loans within minutes via their mobile phones, making digital loans a quick fix for daily bills.

Mobile money has grown to be a lucrative revenue stream for telcos and credit providers as customers use them to send cash, pay for goods and services and take short-term credit.

The total number of registered mobile money accounts in Kenya stands at 67.94 million as of February 2022, official data from the Central Bank of Kenya shows.

Transactions performed on mobile money providers include paying for commodities and services, taking out loans, opening savings accounts, making payments for government services, and betting, among others.

Telkom, which is undergoing restructuring, is banking on fresh revenue streams through new products to push it to profitability and turn around its loss-making business.

Restructuring of the company’s business came after talks to merge with competitor, Airtel Kenya Limited, collapsed.

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