Safaricom launched an interesting product known as Fuliza ya Biashara. This is an overdraft for businesses ranging from 1,000 to 400,000 shillings via their mobile phones with no paperwork required, a new revolution that will see banks sweating.
The product, according to Safaricom, will apply when making transactions from a Lipa Na M-Pesa business to other till numbers and pay bill numbers, when sending money to an individual, and when withdrawing to the nominated number or at an Agent.
Safaricom announced that Fuliza ya Biashara is immediately available through the M-Pesa Business App and on the Lipa Na M-Pesa Transacting Till on *234#. This will help SMEs who find it difficult to access funding from financial institutions to benefit.
What does this mean for Kenyan banks?
Despite the high-interest rates associated with Fuliza, there is no doubt that Safaricom is going to have many taking up this product, making a kill and leaving banks wishing they would have given small and medium enterprises a better deal on loans.
Safaricom has about 538,000 businesses that use Till Numbers. All these businesses now qualify for the Fuliza ya Biashara with the potential of taking up to 400,000 shillings. This means that Safaricom already has 500,000 potential businesses on board.
Kenyan commercial banks have often treated a Kenyan SME as a potential thief, a suspect who might run away with their money at any time if given a chance. Before they can give an SME a loan, for instance, they will demand so many things that have made many give up.
An SME, therefore, who has the option to apply for a loan of 500,000 shillings from a bank and 400,000 shillings from Fuliza, will go for Fuliza without thinking twice. Why? Fuliza will be timely. No need for paperwork and being asked suspicious questions. Despite the higher rates, people will go for it.