Safaricom offers cellular bank accounts

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SAFARICOM, East Africa’s biggest cellular network operator, and Commercial Bank of Africa have introduced a service that allows cellphone users to apply for and receive loans on their handsets.

Report by Bloomberg

Branded M-Shwari, which means “all is well” in Swahili, the facility also allowed clients to operate a savings account with deposits earning as much as 5 percent interest annually, Safaricom chief executive Bob Collymore said yesterday. The product would provide access to financial services to the more than half of Kenya’s population who were “unbanked”.

“Just one click on your phone and you will have a bank account at no cost,” Collymore said in a statement.

Safaricom, in which Vodafone owns a 40 percent stake, is the inventor of M-Pesa, a cellular money-transfer system that is used to transact 80 billion shillings (R8.2bn) a month, according to the company.

More transactions are carried out using M-Pesa within Kenya than are processed globally by Western Union, the world’s biggest money-transfer business, according to the International Monetary Fund.

Commercial Bank of Africa, based in Nairobi, has been the primary banker for M-Pesa.

M-Shwari users would be eligible for loans after at least six months of using the service and all loans were payable within a month of disbursement, Collymore added.

Safaricom and the bank would offer users loans of as much as 100 000 shillings payable at a one-time interest rate of 7.5 percent, he said.

Customer deposits in Kenya’s 43 banks and one mortgage-finance company climbed to 1.49 trillion shillings in December last year from 1.24 trillion shillings a year earlier, while gross loans during the period grew 30 percent to 1.2 trillion shillings, Central Bank of Kenya’s annual report showed.

The number of loan accounts increased to 2 million from 1.74 million in the same period, the bank reported.

Revenue from M-Pesa jumped 32 percent to 10.4 billion shillings in the six months to September. The service contributes 18 percent of Safaricom’s revenue.

Safaricom announced on Monday that it had partnered with British American Insurance, a unit of British American Investments, and Kenyan firm Chagamka to introduce a “low-cost” medical-insurance product that would let customers finance health-care services through their cellphones.

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