M-Shwari, a mobile lending product from Safaricom in partnership with NCBA, has raised its minimum loan limit to Ksh 2000. The new limit is four times higher than the previous one of just Ksh 500.
Due to the changes, customers who will need to take loans less than the new minimum will be forced to use Fuliza, still a product of the two companies.
Fuliza, in its nature, is structured to reduce the rate of loan defaults but is expensive as compared to M-Shwari.
M-Shwari charges a 7.5 per cent loan facilitation fee, cheaper than the current average lending rate in the country.
In contrast, taking a loan from Fuliza costs 1.083 per cent, which may sound low but is slightly over 390 per cent when annualized compared to M-Shwari’s 90 per cent.
M-Shwari implemented the new changes on Monday, August 10th, and all customers who qualify to borrow on the platform have been notified.
According to NCBA Group managing director John Gachora, the limit increase to Ksh 2000 is meant to move customers who borrow less to Fuliza as it’s suited for unplanned expenditures.
“Since launching M-Shwari, we have rolled out Fuliza with Safaricom. Fuliza is the one to address this ad hoc immediate credit. So we see the new proposition of M-Shwari being planned short-term credit,” he said.