In the words of Micheal Joseph, former Safaricom CEO, middle and low income earners want credit and finance services available for their counterparts up the food chain, but they dont know how. This is the reserve of those who can raise collateral for the badly needed financing in business. Micro-finance institutions have come to fill the gap, which in most cases requires them to be in groups of like minded business persons or employees. So there is still a gap to be filled for quick loans for emergencies and small businesses, more-so small-scale businesses that barely have business records.
Safaricom and Commercial Bank of Africa today unveiled a product that will see this gap filled, atleast in Kenya. The product, M-Shwari runs off Mpesa and is in the menu accessible once an Mpesa user updates their Mpesa menu. M-Shwari is a paperless banking product that allows customers to save money that is in Mpesa to a bank account without actually going to the bank to open an account. Once you update the M-Pesa menu, the M-Shwari link appears and you can then proceed to activate it. There are some terms and conditions to read and accept the before activating it. Once done you can now either send money to your bank account or retrieve it, a process which is free. Users are able to save money from as low as 1 shilling and credit of as low as 100 shillings. Money borrowed is transferred immediately to Mpesa account for withdrawal.
On the same menu, you can access and pay loans from the bank, amounts ranging from Kshs 100 to 20,000. This is the figure available at this moment and will be reviewed later on to stretch to higher limits. Interest rates on the same are 7.5%, a one time facilitation fee on the borrowed amount, payable within 30 days.
Safaricom will be using customer data like Mpesa, airtime and other Safaricom data spending and behaviour in their customer to judge how much you can get. This is set in an algorithm that queries the data and gives you feedback in a short time. Safaricom is banking on the 19 million users to scale the very well received product which has been in the works for the last 5 years. 15 million of these are on Mpesa.