Safaricom launches new product that offers mobile loans
Kenya's Safaricom and Equity Bank launch M-Kesho ("Tomorrow"), a new mobile banking product that for the first time offers mobile deposit, credit and life insurance services.The service offers customers basic banking transactions like deposits, withdrawals and loan applications. Customers holding an M-Pesa account can apply for loans ranging from KSH 100 to KSH 5,000 (approximately Euro 0,95 to 48), and the decision if they receive a loan will be based on their former M-Pesa usage and deposits. M-Kesho's Interest Earning Account offers interest rates ranging from 0.5 % to 3% pa.
Equity Bank CEO James Mwangi said on Tuesday (May 19th, 2010) that with M-Kesho “we want to ensure that no Kenyan is locked out of accessing basic banking services.” He added that at "the village level, the shopkeeper will allow his customers to deposit and withdraw money as they buy sugar and milk." In Kenya, most financial transactions are informal. A recent survey by the Financial Sector Deepening (FSD) program estimates the total value of mobile transactions in Kenya to be around KSh1.5 billion (Euro 15 million) monthly, or KSh18 billion a year (Euro 180 million) , The Standard (Nairobi, Kenya) reports.
In January, Kenya amended the Banking and Microfinance Acts, thereby allowing banks to use agents as channels for their services. This opened a window for Safaricom and banks to forge partnerships. The law was part of the FSD program, which is supported by UK's DfID, the World Bank, and SIDA. Through this program, the Central Bank of Kenya (CBK) hopes to increase access to financial services in marginalized areas of the country.