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‘Fuliza ya Biashara’ is Giving up to Ksh400k in Overdrafts - Money Weekly
‘Fuliza ya Biashara’ is Giving up to Ksh400k in Overdrafts - Money Weekly
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‘Fuliza ya Biashara’ is Giving up to Ksh400k in Overdrafts - Money Weekly

Sheila Brenda Andoi
May 4, 2023

It is the first Thursday of May 2023 and barely four days into the fifth month of the year there is already a lot that has happened in the world of businesses. 

If you were paid your salary by the end of April, what percentage of your salary remains? Now that’s a fun question to think about as we dive into the top money news from the last seven days in this week’s edition of Money Weekly. 

From NHIF contributions set to decrease for low income earners starting July, to Fuliza for business being launched, and Kenyan retirees being ranked among the poorest globally, the last week has quite a lot to unpack.

As we do every Thursday, here's our weekly summary of the top money news from the last seven days that could impact your pocket.

Safaricom Launches “Fuliza ya Biashara”

Safaricom and KCB Bank Kenya have launched an overdraft facility to assist businesses access short-term working capital.

Businesses that use Lipa Na M-PESA will be able to complete payments even if they do not have enough money in their till, thanks to "Fuliza ya Biashara."

The credit facility will be applicable when withdrawing money to the designated number or at an agent, sending money to an individual, and making transactions from a Lipa Na M-PESA Business Till to other Till Numbers and PayBill Numbers.

The program would provide a 24-hour interest-free overdraft advance of up to Ksh400,000.

Fuliza ya Biashara will be available on both the M-PESA Business App and the Lipa Na M-PESA Transacting Till.

Business owners get a minimum overdraft of Ksh1,000 and a maximum of Ksh400,000, depending on their set limit.

The overdraft is immediately recovered from incoming till payments. 

Any funds that have not been repaid after 24 hours are subject to a daily access fee of 2% for a maximum of 29 days.

When a repayment is made, the Fuliza ya Biashara limit is reset, allowing business owners to quickly access new overdrafts, including the amount repaid.

According to the two Safaricom, the facility aims to address a credit gap for high-risk small and microbusinesses.

Based on Lipa Na M-PESA transaction history and historical overdraft payback history, the system assigns each firm a personalised overdraft limit.

Fuliza ya Biashara, the most current in a series of platform upgrades aimed at business owners, is M-PESA's first credit solution created particularly for businesses.

Read Also: University Students to Receive HELB Loans Through M-PESA

NHIF Contributions for Low Income Earners to Drop

The monthly contribution to the National Hospital Insurance Fund (NHIF) for the lowest-paid employees and the self-employed will be reduced from Ksh500 to Ksh300 beginning in July, according to President William Ruto.

The President said this during the Labor Day Celebrations in Nairobi on Monday, May 1. 

“Yule ambaye mlikuwa mnalipa kwa NHIF Ksh500 sasa tutateremsha chini ikuje Ksh300. Na mimi ambaye ni rais nimekuwa nikilipa Ksh1,000 sasa mimi nitalipa Ksh27,500,” Ruto said.

“Every one of us is going to contribute 2.7% of their earnings to NHIF so that we can carry this load of health equally,” he added.

He expressed his desire for every Kenyan to register with the NHIF and the National Social Security Fund (NSSF).

President Ruto highlighted his commitment to providing improved healthcare to Kenyans, noting that many slip into poverty due to excessive medical costs and that the insurance will considerably assist in reversing the trend.

At the same time, President Ruto said that the government would launch a volunteer program with the goal of enlisting 100,000 community health promoters to assist in providing medical care to Kenyans at the bottom of the social economic pyramid.

According to the head of state, the pay for the volunteers will be shared between the local administration and the state on a 50-50 basis.

Currently, voluntary and self-employed individuals contribute Ksh500 per month to the NHIF, while employees in the formal sector contribute between Ksh1500 to Ksh1,700 per month, depending on their pay scale.

Read Also: Family Health: Budgeting for Healthcare Costs in Kenya

Kenyan Retirees Ranked Among the Poorest Globally

A recent study shows that Kenyan retirees are among the poorest in the world, and many elderly people work well into their retirement years due to the country's ineffective pension system.

According to a survey conducted by Allianz, a global provider of financial services, Kenya's pension system does not ensure an adequate standard of living in old age, leaving the majority of those 65 and older in poverty in comparison to their counterparts in other countries.

The survey also revealed that Kenya has the highest proportion of people aged 65 and older who are still working due to low pension coverage, with nearly 70% of its elderly male population working.

This comes at a time when the National Social Security Fund (NSSF) has been under pressure to increase employee pension contributions from a minimum of Ksh200 to Ksh1,080 every month. 

The report examined 75 countries, including five in Africa.

Because public pensions are frequently the only source of income in old age, the ideal pension, or first pillar pension, should have a benefit ratio of 40% to 60% of the average wage, according to International Labour Organization standards.

Only a small proportion of Kenyans save for retirement. Millions of Kenyans, particularly those working in the informal sector, lack access to the pension system.

Other African countries surveyed were Egypt, South Africa, Nigeria, and Mauritius.

Read Also: How Much Money Does a Kenyan Need to Retire at 45?

Local Lenders Gave Ksh6.2 Trillion in Loans in 2022

The total amount of credit advanced by commercial banks and non-bank financial institutions increased by 12.3% in 2022 to Ksh6.2 trillion, according to the latest data from the Kenya National Bureau of Statistics (KNBS).

This is a rise from the Ksh5.5 trillion given to borrowers in both the public and private sectors in 2021, according to the Economic Survey 2023. 

The increase has been attributed mostly to an increase in credit given to private businesses, which has risen to Ksh2.4 trillion, as per KNBS.

“Of the total loans advanced to the private sector, the wholesale and retail sector took the lion share of 24.7%, an equivalent of Ksh607 billion,” the report partly reads.

Building, construction, and real estate, and manufacturing sectors came in second and third, with 22.9% and 21.5%, respectively.

Agriculture, storage and communication, business services, and insurance received 12.3%, 4.8%, 8.2%, and 4.8%, respectively.

Interest rates for loans and advances rose from 12.16% in December 2021 to 12.67% in December 2022.

>>>>> Compare Business Loans in Kenya Here

Patients with Chronic Diseases to Get Unlimited NHIF Cover

Patients with chronic diseases such as cancer and kidney failure will get unlimited National Health Insurance Fund (NHIF) coverage under the proposed modified criteria, which would elevate employee monthly contributions to 2.75% of their income.

The new NHIF regulations, which were released on Tuesday, May 2, 2023, aim to relieve the financial strain on families by lifting restrictions on the benefits available to patients with chronic illnesses.

Patients who exhaust all resources in private facilities will still continue to use public hospitals for costly services such as dialysis, chemotherapy, and radiotherapy.

Other Money News

  • According to the Kenya National Bureau of Statistics (KNBS), Kenya's economy expanded 4.8% in 2022, compared to 7.6% in 2021, as a result of a severe drought that lowered agricultural output. Kenya, like the rest of East Africa, is recuperating from the worst drought in four decades, which has driven up the cost of basic necessities. It has also been fueled by a weakened local currency and a higher level of state debt.
  • Mitumba vendors could be compelled to sell at least 10% of local textile apparel if a new proposal by the Kenya Association of Manufacturers (KAM) is enacted. According to the recommendations of the manufacturing lobby in the proposal titled "Overview Of Kenya's Textile and Apparel Sector," the government should adopt a framework that limits imports of used clothes and shoes.

    According to KAM, the apparel industry is one of Kenya's most promising, with the potential to generate over 200,000 jobs by 2030 and save the country approximately Ksh40 billion annually by halving the import of used clothing.
  • The formal sector added 109,300 jobs last year, pushing the number of salaried workers above levels seen before Covid-19, indicating that areas such as hospitality and transportation are still growing.

    According to KNBS data, there are now 3.02 million formal sector jobs in total, up from 2.93 million in 2019 before the Covid-19 interruptions caused a loss of 185,800 jobs in 2020.
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Sheila Brenda Andoi is a communicator, journalist, editor, and writer passionate about human-interest stories. You can find her on Twitter @sheilaandoi

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