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9 May 2022

Patrick Alushula, The Standard (Kenya)

Kenya: Senior Safaricom official regrets unsustainable borrowing breeze on mobile lending platform, condemning users to cyclic debt

"Michael Joseph: This is not the Fuliza I wanted at Safaricom"

For all the good things M-Pesa has brought, Michael Joseph, the man who gave life to the transformational idea that won global praises has some regrets too; the borrowing frenzy... From sending and receiving money to paying for goods and services, the application of M-Pesa has kept expanding and transforming peoples’ lives as well as earning Safaricom up to 45 per cent of its revenue...

But for all its good things, Mr Joseph carries some regrets over the borrowing spree that he has witnessed on M-Pesa linked lending products — Fuliza, Mshwari and KCB-M-Pesa. “To some extent, there have been negatives as well. In my personal view, some of the things we are doing with M-Pesa, like borrowing, are not good for the people,” said Mr Joseph. Borrowing through M-Pesa, he says, is “too expensive” for the customers. This is despite the mobile overdraft product, Fuliza, continuing to gain popularity among Kenyans. Borrowings from Safaricom’s Fuliza hit Sh578 billion last year as ease of use and economic hardships pushed over 700,00 new users to the overdraft service...

While this means more revenue for Safaricom, it is a statistic that bothers Mr Michael who says this was not the dream he had. “When I introduced M-Shwari, the plan was that it was going to be a savings and borrowing product. So first, you save and get the habit of saving. Then after saving, you borrow money based on your savings,” Mr Joseph says. “That was the plan. But unfortunately, it never worked out that way. People borrow more than they save, which is not what I intended.”

This troubles Mr joseph given the “transforming lives” tag on whose wings Safaricom brand flies. “I wanted people to save for the future instead of borrowing for funerals or weddings or school fees. Unfortunately, because you (telcos and banks) make more money when you lend people more money, it became a lending product,” said Mr Joseph