Men Top In Digital Borrowing As Kenyans ‘Fuliza’ Ksh1.2Bn Daily

2021 has definitely been moving at full throttle, it almost feels like we blinked and found ourselves in September. Weren’t we celebrating Easter just the other day?

As we usher in the new month, let’s take a look at what has been topping the financial headlines over the last seven days.

Kenyans Borrow Ksh1.2 Billion on Fuliza Every Day

Speaking to the press on Monday, NCBA Group CEO John Gachora revealed that in the six months to June this year, Kenyan’s have been borrowing Ksh1.2 billion every day from Fuliza, an overdraft service offered by Safaricom.

Over the first six months of 2021, Fuliza disbursed Ksh220.38 billion, a 25% increase from the Ksh176 billion the facility disbursed in the first six months of 2020, or about Ksh972.3 million every day. This increase in disbursements is an indicator of the income shortfalls that have plagued Kenyans due to the Covid-19 pandemic, pushing many of them to debt.

Introduced by Safaricom in 2019 and underwritten by KCB Group and NCBA Group, Fuliza is an overdraft service that allows M-Pesa users to send money and make payments even when they have zero balance on their mobile wallets.

NCBA Group expects the uptake of Fuliza loans to continue growing, with Gachora saying that “Fuliza is still on a growth path that is why you see the most growth in digital loans this year is coming from Fuliza. We expect it to grow for quite some time and we still feel there is leeway for growth.”

Despite disbursing over a billion shillings daily, Fuliza is not Kenya’s most popular digital lending platform. According to the State of Digital Lending 2021 Report released by Reelanalytics on Wednesday, the most popular digital lending platform is Safaricom’s Mshwari with 40% market share. Coming second is Tala (36%), while Fuliza (30%) comes in at third place. 

Source: @Reelanalytics/LinkedIn

Men Top In Digital Borrowing

The report by Reelanalytics also revealed that six out of every ten Kenyans have accessed credit from a digital lending platform, with men being more likely to borrow (59%) compared to women (49%).

The report, which polled 1,000 Kenyans from 8 different counties, also showed that men borrow from multiple digital lending platforms, compared to women, who are more likely to stick to a single brand. In addition, men are less concerned about defaulting on their digital loans and the consequences of defaulting compared to women.

According to the report, some of the key factors that drive the uptake of digital loans in Kenya include the convenience and ease of access offered by digital loans (39%), the speed of disbursement (22%), and the affordability of digital loans (12%).

Source: @Reelanalytics/LinkedIn

Lawmakers Dismiss Bill Proposing Lower Interest For HELB Loans

A bill proposing the lowering of interest rates for loans issued to university students has been thrown out by the National Assembly’s Education Committee. The proposed changes to the Higher Education Loans Board (HELB) Act sought to reduce the interest on HELB loans to 3%, down from the current 4%.

The proposed changes also sought to increase the grace period for repayment of HELB loans to 5 years after graduation, a move that would cushion graduates who are yet to secure jobs from hefty fines. Currently, HELB beneficiaries only have a grace period of 1 year before they are required to start repaying the student loans, with failure to do so resulting in a Ksh5,000 fine every month.

The committee said that proposed changes would result in the loans board losing Ksh693 million every year or Ksh3.4 billion in 5 years. This, the committee said, would make it harder for the loans board to fund needy students in future.

Ksh10B Up For Grabs For Kenyan YouTubers

Kenyan YouTube creators have a reason to smile after the video streaming giant announced a new $100 million (Ksh10.98 billion) fund. The fund, which will be distributed through 2021 and 2022, will see Kenyan YouTube creators receiving up to Ksh1.1 million in monthly pay based on the performance of short videos uploaded to the platform.

This is part of YouTube’s plan to popularise its Tiktok competitor, YouTube Shorts,  over the course of 2021 and 2022. The money will be paid to thousands of creators every month based on the views and engagements garnered by their short clips.

Before the announcement in Kenya, the fund was only available to creators in the US, UK, India, South Africa, and Nigeria, among others. Kenyan YouTube creators only earned from posting longer videos.

To be eligible, YouTube creators will need to meet certain requirements which will change each month. The performance metrics required in order to receive the bonus payment will also be subject to change each month.

Shilling Falls to Lowest in 6 Months Against US Dollar

The Kenyan shilling, which has been on a decline against the US dollar, hit its lowest mark in six months on Wednesday. As the close of the trading day approached on Wednesday, the shilling slid to Ksh110.02 against the dollar. This is the weakest the shilling has been quoted against the dollar since February, when it hit a low of Ksh110.40.

The weakening of the Kenyan shilling against the dollar has been attributed to the increased end-month demand for the dollar by importers, as well as the high prices of crude oil, which traded upwards of $70 per barrel at the close of last week.

Thousands of Kenyan Business Denied VAT Account Rights

The Kenya Revenue Authority (KRA) announced that it was yet to reactivate the Value Added Tax (VAT) accounts of over 66,000 businesses, effectively locking out their operations. The accounts of 66,269 businesses were deactivated on June 10 for perennially filing nil returns or failing to file monthly returns.

The taxman invited the businesses to apply for reactivation upon submission of all necessary evidence, but by Monday, only 74 businesses had been cleared.

The businesses whose VAT accounts remain deactivated will not be able to make VAT claims for business inputs or charge VAT on supplies.

In other news, Co-Op Bank, NCBA and Stanbic Bank have won a tender to manage the pension contributions for public servants, amounting to over Ksh2.6 billion every month. 

Meanwhile, City Hall is seeking to implement a new policy that will see motorists charged an hourly rate of between Ksh75 and Ksh100 for parking within the city center. 

This comes as the county government seeks to ease traffic congestion within the city by discouraging motorists from bringing their vehicles into the city center.