M-PESA Founder On Loans: This is Not What I Wanted

In an interview with the Standard newspaper, Michael Joseph, the founding CEO of Safaricom, has aired his disappointment at MPESA’s growing dependence on lending products.

Joseph, who refers to himself as the ‘Mother of M-PESA,’ says no one at the company could have predicted the success that M-PESA has achieved when it was started in 2007.

However, despite the success, the current Safaricom board chairman does not like the trajectory the mobile money product has taken in the last ten years, with its lending products.


SEE ALSO: We are Transitioning to Become a Digital Financial Services Provider, Says CEO, Safaricom (M-PESA)


Borrowing through M-PESA, he says, is ‘too expensive’ for the customers.

“When I introduced M-Shwari, the plan was that it was going to be a savings and borrowing product. So first, you save and get the habit of saving. Then after saving, you borrow money based on your savings.”

– Michael Joseph, Former CEO, Safaricom

As it is, the CEO believes that people use the platform to borrow more than they save, which is contrary to how it was intended.

Since 2012, when Safaricom introduced M-SHWARI loan products in tandem with CBA bank, the firm now has 3 of them:

  • M-SHWARI underwritten by CBA
  • KCB M-PESA underwritten by KCB
  • Fuliza

While Safaricom does not break down the contribution of the loan products to its service revenue, M-PESA’s share of the revenue has continued to rise in the last few years, with the product reportedly earning 45% of the telcos revenue.

In 2019, the two banks underwriting M-SHWARI and KCB M-PESA came together with Safaricom to launch a different kind of lending service, an overdraft service. Dubbed Fuliza, this lends micro-loans to consumers to enable them complete transactions when they are short of funds.

Fuliza has grown popular quickly, coinciding with the COVID-19 pandemic, with borrowings hitting $5 billion in 2021. This translated to $13.7 million borrowed via Fuliza daily in 2021.

Fuliza’s success has become so much so that users are less interested in the original loan products, M-SHWARI and KCB M-PESA.


RECOMMENDED READING: EXPLAINER: How the Massively Successful Safaricom M-PESA Agency Network is Driving Digital Banks in Kenya to Go Physical


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