launched in November 2012, M-Shwari is underwritten by NCBA and is linked to Safaricom’s M-Pesa. The service allows customers to save as little as Sh1 and access digital loans from Sh2,000. According to NCBA Group Managing Director Mr John Gachora, the amount was in the lock savings account at the end of December last year, marking a growth from Sh28 billion. “That is a number that has grown from Sh28 billion and we regard it as a lot. We have to keep preaching about saving because many people look at M-Shwari as a borrowing product yet it was conceived as a savings platform,” said Mr Gachora. The Sh32 billion savings came in the period customers borrowed Sh88 billion on the M-Shwari product – meaning borrowings are about 2.75 times the savings. The service allows customers earn interest of up to 6.3 per cent per year on their savings balance if they put the money in a locked savings account that is also under M-Shwari.Money can be saved on M-Shwari lock savings account for between one to 12 months. Customers with a good savings and repayment history can tap into as high as Sh1 million using the M-Shwari product. Charges on M-Shwari loans are nine per cent, made up of 7.5 per cent fees and 1.5 per cent excise duty. M-Shwari loans add to other digital loan products such as Fuliza and KCB-M-Pesa which continues to attract many Kenyans seeking short-term loans. Kenya has been at the forefront of providing digital financial services for over a decade. Mobile-based banking and lending platforms has provided unbanked populations with access to financial services and increased financial inclusion by over 50%. Since the launch of M-Shwari, the number of digital lenders and loans disbursed has grown substantially. Advances in credit scoring, few regulatory barriers and the widespread use of mobile phones and mobile money have enabled growth of the digital lending industry, giving borrowers a quick and convenient option for credit. Safaricom Chairman Michael Joseph in a recent interview with The Standard said that he feels disturbed by the borrowing frenzy in Kenya. “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 said. “That was the plan. But unfortunately, it never worked out that way. People borrow more than they save, which is not what I intended.”
