M-Shwari, Safaricom’s mobile lending platform, experienced a significant decline in deposits and an increase in loans in the financial year ending March 2023. According to Safaricom’s latest sustainability report, deposits plummeted by 44.1 percent to Sh416.7 billion, while loans increased by 6.3 percent to Sh91.5 billion. This was accompanied by a 39.6 percent rise in loan disbursements from Fuliza, Safaricom’s overdraft service, which reached Sh701.5 billion.
The decline in M-Shwari deposits, which plummeted by 44.1 percent to Sh416.7 billion, is a reflection of the liquidity challenges faced by Kenyans. On average, Kenyans deposited Sh1.14 billion daily into their M-Shwari accounts, demonstrating a nearly 50 percent reduction from the Sh2.04 billion daily savings seen in the preceding financial year.
Despite the Central Bank of Kenya’s decision to raise the Central Bank Rate (CBR) from 8.75 percent to 9.5 percent in May 2023, M-Shwari chose to maintain its lending rate at 7.5 percent, providing a slight relief to its users. In contrast, competitors like KCB M-Pesa responded to the CBR increase by raising their rates to 8.85 percent.
M-Shwari is a mobile savings and loan service integrated with Safaricom’s mobile wallet platform M-Pesa. It provides users with the convenience of managing their accounts via mobile phones. The platform offers a unique feature, the M-Shwari lock savings account, allowing users to save for periods ranging from one to twelve months, earning an annual interest rate of up to six percent.
M-Shwari loans are instantly disbursed to customers’ M-Pesa accounts upon application. The platform commands a significant market share, accounting for 34 percent of the digital lending industry, closely followed by Fuliza with a 25 percent market share.
The increase in loan disbursements from M-Shwari and Fuliza is a clear indication of the economic challenges faced by Kenyans. Despite the high cost of credit, many Kenyans are forced to rely on these services to meet their financial needs.
This trend is indicative of the economic hardships faced by Kenyans, who are increasingly relying on credit facilities to meet their financial needs. The Central Bank of Kenya’s decision to raise the Central Bank Rate (CBR) from 8.75 percent to 9.5 percent has also made it more expensive to borrow money.
Despite the challenges, M-Shwari remains the most popular digital lending platform in Kenya, with a market share of 34 percent. The platform’s popularity is attributed to its convenience and accessibility, as well as its competitive lending rates.