The payment hitch, disclosed in a report by the National Assembly Committee on Labour and Social Services, shows the youth’s addiction to mobile loans that are easy to access.
Fuliza was introduced in January 2019 and is popular among low-income earners who take loans of less than Sh2,000 for their daily needs, with the debt settled after sales are made or wages received.
In the Kazi Mtaani programme, the youth are hired for 11 days and are compensated at a rate of Sh455 per day.
This is down 30 per cent from the Sh650 daily wage rate when the short-term employment programme was launched on April 29.
Some of the young people employed on the government’s economic stimulus programme Kazi Mtaani cannot be paid through their mobile phones because their lines have been blocked for failure to settle Fuliza overdraft loans.
Others have had their wages withheld because they furnished the government with mobile numbers of their relatives, which do not match their personal details, to evade debt payment.
The payment hitch, disclosed in a report by the National Assembly Committee on Labour and Social Services, shows the youth’s addiction to mobile loans that are easy to access in small amounts but are priced higher compared to credit from banks and saccos.
Most of the young people are hooked to Safaricom’s #ticker:SCOM credit service Fuliza, which is linked to mobile money platform M-Pesa and is designed to deduct the outstanding debt automatically within 24 hours.
“Some youth had blocked or frozen numbers due to having taken Fuliza loan from Safaricom,” the report says.
“Some used IDs that belong to other family members. The challenge is that the details provided do not match their ID numbers, resulting in pay delay.”
Fuliza was introduced in January 2019 and is popular among low-income earners who take loans of less than Sh2,000 for their daily needs, with the debt settled after sales are made or wages received.
In the Kazi Mtaani programme, the youth are hired for 11 days and are compensated at a rate of Sh455 per day. This is down 30 per cent from the Sh650 daily wage rate when the short-term employment programme was launched on April 29.
Fuliza charges a facility fee of 1.083 per cent or 395.2 per cent annualised, underlining the high cost of using the short-term credit service regularly. Most bank and sacco loans are priced from 12 per cent to 14 per cent per year but lock out people without steady income streams.
Surveys have shown many people who take digital loans are juggling credit from multiple platforms, ultimately leading to default on some of the platforms. Fuliza had lent an estimated Sh81 billion in the six months to June last year, indicating the huge demand for small loans conveniently delivered through mobile phones.
The government decided to use M-Pesa, the most popular mobile money service, to pay the young people in a convenient way that also reduces risk of handling cash in the wake of the highly infectious coronavirus.
The report to Parliament comes after various youth protested delayed payments.
Last week, Housing Principal Secretary Charles Hinga sought to assure the youth that legitimate claims would be processed after county implementation committees verified their details against returns from the paying agency.
“Payments for workers under the Kazi Mtaani programme are made via mobile money and it has been noted that some workers’ details may have had errors which resulted in their payments not going through,” Mr Hinga said.
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