Vodacom director of Financial Services Micheal Joseph pose with models during the launch of M-Shwari money services at Windsor yesterday
The thin line between Mobile money services and banking services has become thinner with the launch of Safaricom's micro-credit services M-shwari in partnership with the Commercial Bank Africa.
The M-shwari product launched yesterday has designed as a savings and loans platform for M-pesa customers in partnership. Users can save as low as one shillings and borrow loans from as little as Sh100 and maximum Sh20,000 using their phones with no transaction costs attached.
According to commercial bank of Africa managing director, Isaac Awuodo savings will gain between two and five percent depending on the amount saved.
Borrowers will repay their loans at 7.5 percent. The loans maturity period is fixed at maximum of 30 days. "This is a huge leap to the desired financial inclusion of bottom end of the pyramid, who may not have been able to access credit from banks to grow their business," said central bank governor Njuguna Ndung'u.
He said the product has the potential to stimulate growth in the small and medium business sector in the quest for poverty eradication. According to Ndung'u, banks must adopt the telecom linked solutions to reach the masses instead of viewing the innovations as an invasion into their territory.
"This is another first for Kenya and we can not predict the impact it will have on the social welfare of the people of Kenya just like we could not predict the M-pesa phenomenon" said Michael Joseph, the Vodafone director for Mobile money.
He said the service will give an avenue for poor people who have no bank accounts to save because it eliminates the complicated nature of bank savings accounts.
"M-swari will revolutionize the way Kenyans view savings and credit products and solve one of the major problems of access to financial services by millions of Kenyans.
19 million Kenyans are subscribed to Mpesa, while only 6.2 million of the eligible 20 million adults have bank accounts.
"Research indicates that a staggering Sh200 billion remains unbanked, not earning interest and not generating much value for their owners, and most unfortunate most of it stored in unsafe manner," Said Safaricom chief executive Bob Collymore.
The service is n now backed by an introduction of Integrated Population Registration System system which interlinks with the banks and Safaricom to ensure con men and fraudsters do not abuse it. Immigration minister Otieno Kajwang said the systems has detailed data of all registered Kenyans and keeps records of the dead.