Kenya has more mobile borrowing than almost anywhere. Loans arrive in seconds on your phone - which is why they are useful in an emergency, and why they become expensive when used every month.
The main options
- Fuliza - an overdraft on M-Pesa. When your balance is too low to pay, Fuliza covers the gap. There is an access fee, then a daily fee for every day the overdraft is unpaid.
- M-Shwari - a loan from NCBA through M-Pesa, with a facilitation fee of 7.5% for a 30-day loan.
- KCB M-Pesa - loans from KCB Bank through M-Pesa, over one to a few months.
- Digital loan apps - many lenders offer loans through smartphone apps. They must be licensed by the Central Bank of Kenya as digital credit providers.
The true cost
Fees look small because they are quoted per loan, not per year. A 7.5% fee for one month is very roughly 90% a year if you borrow like that every month. Fuliza’s daily fee on a small overdraft left for weeks can be even more.
Compare with a bank personal loan at a fraction of that, or a SACCO loan. Work out any loan’s cost with the loan repayment calculator.
Your credit record
Mobile lenders report to the credit reference bureaus. An unpaid Fuliza or app loan can lead to a negative listing that makes bank loans harder and can block some jobs. See Checking your CRB status.
Repaying on time builds a record that can raise your limits and help you borrow elsewhere.
Using them well
- For emergencies only, and repaid within days.
- Do not borrow from one app to repay another.
- Check the lender is on the CBK list of licensed digital credit providers.
- Opt out of Fuliza if it tempts you, through the M-Pesa menu.
Unlicensed lenders and harassment
Licensed lenders may not shame borrowers, contact people in your phone book, or threaten you. If a lender does, report it to the Central Bank of Kenya and the Office of the Data Protection Commissioner.
Cheaper alternatives
- A SACCO - loans as a multiple of your savings, at lower rates. See SACCOs in Nairobi.
- A salary advance from your employer.
- An emergency fund in a money market fund. See Money market funds.