Kenyan integrated mobile services operator Safaricom has teamed up with Commercial Bank of Africa (CBA) to offer M-Pesa users a chance to save as well as access money in a partnership that could help make the bank the largest in terms of customer base.
The MShwari product targets the over 15 million M-Pesa users, with the aim of interesting them in saving while at the same time offering them an opportunity to access credit services.
The innovation is another first from the largest mobile money transfer service in the world, which transacts around 50 percent of all such transactions globally, worth over KSh4.3 billion annually (approx $50.2 million) .
MShwari will see M-Pesa users access credit as low as KSh100 (approx $1.2) and as much as KSh20,000 (approx $235) in the initial stages.
According to CBA chief executive officer Jeremy Ngunze the credit will attract a facility fee of 7.5 percent, payable within 90 days.
The MShwari product will also enable users to save through the same bank from as little as KSh1, with the funds attracting interest of five percent annually.
For the bank the partnership could be a game changer, HumanIPO has learnt.
According to group managing director Isaac Awuondo the partnership could increase the bank’s current customer base from 40,000 to 12 million within the next 12 months, possibly making it the largest in the country in terms of customer base.
“We are currently registering 20 new customers per minute,” he said to HumanIPO soon after the product was launched.
According to analysts CBA has found a way of capturing the low income market largely left to microfinance.
“This is clearly an ingenious way of CBA getting to microbanking,” said Think Business CEO Ochieng Oloo.
Safaricom CEO Bob Collymore said the product will increase the number of Kenyans holding accounts with financial institutions significantly from the current six million.
“Financial inclusion is a human right and the fact that only half of the adult population has accounts with formal financial institutions is heart dampening,” he said.
Collymore noted that the product will offer the millions of Kenyans lacking credit facilities the chance to borrow “with dignity”.
Communications Commission of Kenya (CCK) director general Francis Wangusi said it was time for telecoms to diversify, as revenue from voice shrinks with products like Skype increasingly becoming popular.
“The voice market is no longer a place for competition in future for any company wishing to progress,” said the regulator lauding Safaricom’s move.
Central Bank governor Njuguna Ndung’u, who also attended the event, challenged banks to utilise technology to leverage on its ability to access even the most remote parts of the country. He noted various requirements remained a barrier to financial inclusion, among them minimum balance and cost of maintaining accounts at financial institutions.
Other speakers said the innovation was a sustainable way to fight poverty.
The launch of MShwari is expected to rival ‘Faulu Airtel Kopa chapaa Service product from competitor Airtel Kenya, which helps Airtel mobile money transfer service users access loans from Faulu microfinance as well seems to be a new resurrection a similar product bringing together Safaricom and Equity bank.