NCBA Group added 16.8 million customers to its short-term loans service Fuliza in the year ended December, underlining the rapid growth of consumer credit.
The company says in its latest annual report that the customers on the platform, which has daily charges for loans that are repaid within a month, had increased to 33.9 million in the review period.
The surge in users came amid a significant reduction in the fees charged on the platform which is a partnership between Safaricom and two banks –NCBA and KCB Group.
KCB has not disclosed the number of its Fuliza customers. NCBA however has most of the customers subscribing to the credit service.
Fuliza numbers closely track the users of Safaricom’s mobile money service M-Pesa through which the cash borrowed is received.
The partners in October last year reduced the daily charges on the overdraft loans, with the fee on borrowings of between Sh1,000 and Sh1,500 dropping to Sh18 from Sh20.
A zero-free period of three days was introduced on amounts ranging from Sh101 to Sh1,000.
Those borrowing Sh500 beyond the three days now pay a fee of Sh2.5 which was halved from the previous Sh5. The one-off access fee remained unchanged at one percent.
The changes mean that those borrowing small amounts and have the discipline to repay the loans promptly can sidestep the fees.
“We have continued to assess the evolution of consumer behavior and the economic conditions to identify ways in which we can further enhance the utility of our digital financial services,” NCBA says in the report.
“Towards this end, we introduced changes to Fuliza pricing. We waived the daily maintenance fee, and up to 80 percent of Fuliza borrowers can now access the digital overdraft at zero maintenance fee.”
NCBA disclosed that use of Fuliza increased substantially last year compared to 2021.
The volume of borrowing transactions on the platform increased by 1.3 billion to Sh3.6 billion. The value of the loans disbursed on the other hand increased by $2.78 billion (Sh384.6 billion) to reach a cumulative $11.9 billion (Sh1.6 trillion) since the service was launched in January 2019.
KCB also recorded increased borrowing on the Fuliza accounts it funds, with the loans disbursed rising to Sh124.4 billion last year from Sh96 billion in 2021.
The bank added that the average borrowed amount surged 29 percent to Sh302.
Fuliza allows one to overdraw on their M-Pesa account when one has insufficient funds to complete a transaction.
Borrowers use the facility to meet their short term needs including buying food and paying bills. Small businesses also use the overdraft to access working capital and restock their goods. The high churn rate of the overdraft facilities has helped boost the revenues of Safaricom, KCB and NCBA.
