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CBA plans M-Shwari loan rate cut to fend off rivals

CBA managing director Isaac Awuondo. FILE PHOTO | NMG
CBA managing director Isaac Awuondo. FILE PHOTO | NMG 

Safaricom #ticker:SCOM and Commercial Bank of Africa (CBA) will cut the price of M-Shwari loans to defend market share now under attack from resurgent mobile loan firms.

CBA Group managing director Isaac Awuondo said the reduction will be segmented and favour borrowers with a good credit history. The move is seen as a reaction to the increasing number of players in the mobile loans market as commercial lenders rationed credit after the October 2016 rate caps.

Several lenders including Equity Bank #ticker:EQTY, KCB #ticker:KCB and Co-operative Bank of Kenya #ticker:COOP also offer mobile micro loans.

M-Shwari was established five years ago on M-Pesa mobile money platform as a credit facility for those locked out of the market for lack of collateral and credit history. It charges a one-off facility fee of 7.5 per cent.