Borrowers regret the rush to obtain popular Fuliza loans.
According to a new survey, the irresistible desire to borrow through Safaricom's overdraft service Fuliza is accompanied by regret, with many citing the debt burden that comes with it.
Deloitte and DataEQ discovered that M-Pesa loans dominated the social media platform Twitter conversation, with many borrowers regretting their decision.
"While most of the neutral Twitter conversation was about transactions and vendor promotion, some topics with lower volumes of conversation were more emotive." According to the report, "consumers frequently referred to the increase in loan uptake in Kenya, with many expressing regret in signing up for Fuliza loans."
"Other customers complained that their credit limits were too low and questioned whether Safaricom trusted them to repay higher-valued short-term loans," it added.
Products and services
Fuliza allows Safaricom M-Pesa customers to send or pay for goods and services up to a certain amount above their account balance, and it has proliferated in Kenya since its launch in 2019.
Fuliza charges 1.083 percent daily or 395.2 percent annually, highlighting the high cost of using short-term credit services on a regular basis. The latest data by Safaricom reveals that in the year to March 2022, Kenyans borrowed Sh503 billion through Fuliza or Sh1.37 billion daily. According to Safaricom, the amount disbursed through Fuliza increased by 43% between March 2021 and March 2022.
According to the report, DataEQ tracked over 330,000 Twitter posts mentioning seven leading Kenyan banks in the research on feelings about banking service delivery. It revealed that in 2021, the Kenyan banking industry experienced more negative than positive social media conversation (21.4%), resulting in an industry overall Net Sentiment score of -7.6 percent.
Customers, in particular, complained about high transaction fees on M-Pesa, with 63.7 percent expressing negative sentiments and only 2.8 percent sharing positive sentiments.
"Despite acknowledging M-convenience, Pesa's Kenyan consumers expressed dissatisfaction with how quickly fees and related charges add up and developed workarounds," it said.
This is in addition to other concerns, such as downtime during month-ends, which causes disruptions at a time when many Kenyans conduct transactions.