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More Kenyans who cannot access formal banks are turning to mobile short-term overdraft facilities for their daily subsistence to cope with current challenging financial times.

New data shows that between April and September, an estimated 15 million Kenyans borrowed Sh380.7 billion through Fuliza, M-Pesa and Mshwari platforms, amid dwindling sources of income and high cost of living.

Safaricom has partnered with lenders, NCBA Bank and KCB to operate Fuliza, an overdraft product that enables customers access to unsecured line of credit by overdrawing on M-Pesa to cover short term cash flow shortfalls, subject to predetermined limits.

The telco also runs the KCB M-Pesa and Mshwari lending platforms that enables customers save as little as Sh1 to qualify for loans of between Sh50 to Sh1 million. Data from the company’s half year financials for the period ending September 2023 released last week show an increase in distinct customers and average loan disbursement figures.

The number of those using Fuliza increased by 14.2 per cent to 7.4 million from 6.4 million recorded in September 2022 and borrowed Sh315 billion up 30.1 per cent from Sh242 billion, while Mshwari customers grew to 4.4 million with average loans disbursed increasing by 20.1 per cent from Sh6,047 to Sh7,260 with a total value of Sh43 billion. They also borrowed Sh21.7b through KCB M-Pesa.

Safaricom Chief Executive Officer Peter Ndegwa said the three products drove M-PESA’s growth, which saw the mobile money wallet’s half year transactions value spike 32 per cent Year on Year (YoY) to Sh18.9 trillion, while total YoY transaction volumes rose 32 per cent to Sh9.06 billion.

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“M-Pesa usage continues to grow, driven by our Fintech solutions including payment, lending and savings, and international remittances,” said Ndegwa.

Digital loans have become in Kenyans daily lives was underlined by President William Ruto in September, when he spelled out a raft of measures to lower their cost to increase financial inclusion. Fuliza loans attract daily interests of between Sh3 and Sh25, while Mshwari disburses at 9 per cent interest rate.

This is in comparison to the commercial bank’s weighted average lending rates of 12.41 per cent as of September 2022.

Kenyans use the money to buy basic household commodities like food and settling utility bills, thereby cushioning them from inflationary pressures, with the cost of living having risen to 9.6 per cent last month from 9.2 per cent in September, above the 9.5 per cent market forecasts.

The rate has also breached the upper limit of the Central Bank’s target range of between 2.5 per cent and 7.5 per cent for the fifth straight month.

The telco’s half year net profits declined by 10 per cent to Sh33.4 billion, due to the impact of new capital investment in its Ethiopian venture, review of mobile termination rates and introduction of excise tax on SIM cards which slowed growth in its Kenyan operations.

Revenue service grew slightly by 4.6 per cent while voice and messaging dipped by 3.8 per cent to Sh39.9 billion and Sh5.4 billion, respectively.

However, Mpesa revenue partly offset the decline in the legacy telco services, growing by 8.7 per cent to Sh56.9 billion from Sh52.3 billion a year ago.

Mobile data revenue posted a double digit rate of growth at 11.3 per cent to Sh26.3 billion from Sh23.6 billion while fixed data service revenues recorded the highest growth at 23 per cent to Sh6.8 billion.