Poverty? How Kenyans borrowed over 1 billion shillings in a week

Safaricom notched up one million users for its new overdraft feature on the M-Pesa platform in just eight days, surpassing its CEO’s expectations, he said on Thursday.

Started 11 years ago as a service to allow Kenyans without access to the banking network to transfer money via mobile phones, M-Pesa now offers loans and savings in conjunction with local banks, as well as merchant payments services.

Safaricom, part-owned by South Africa’s Vodacom and Britain’s Vodafone, launched the new overdraft feature called Fuliza on Jan. 7 this year.

“We got a million (customers) by day eight and by day eight we had lent $10 million. Now we are probably at $15 million,” CEO Bob Collymore said in a past interview

“If you don’t have enough cash, you simply draw down from the overdraft and you keep drawing down until you have got to your overdraft limit, which is predetermined by an algorithm.”

Fuliza is underwritten by Kenyan lenders KCB Group and CBA Group, which already had partnerships with Safaricom to offer short-term loans on the M-Pesa platform.