It has been a week since Safaricom launched a new service mShwari. This is not a new service in Kenya. Jipange kusave had a similar approach whereby users were encouraged to save and could also borrow via mPesa. Pesapata has been providing emergency loans by using the many small shops where people buy products they need daily as the main distribution channel. In this case, a borrower obtains a scratch card from their local shopkeeper, the customer uses the code on the card to load money on mPesa, and it allows the user to access the loan. mPepea is also another startup offering emergency loans via mPesa. While all these small startups have to worry about the distribution channel, Safaricom obviously has an advantage since the mShwari platform is easily accessible under the Safaricom menu options on the phone. Airtel’s Kopa Chapaa, a partnership between Airtel and Faulu Kenya has also been around for a while. Airtel still has a very small market share, so their emergency loan service has a long way to go before it reaches the volume that Safaricom currently enjoys.
Image source: Safaricom
mShwari is a partnership between Safaricom and Commercial Bank of Africa (CBA). CBA owns the mobile banking platform, mShwari and as a bank, it is able to accept deposits and give loans. Safaricom was the best partner for CBA, especially because Safaricom has over 15 million mPesa users. Some of the metrics that Safaricom uses to determine the credit worthiness of the borrower include voice usage and the user’s repayment rate for outstanding loans. The new service will continue to address the financing gap that is often felt by the rural poor. mShwari distinguishes itself from other existing services in that the subscriber does not need to go to a bank and open an account; rather, they are able to access the service on the phone. I cannot use the service yet since I have been a subscriber for less than 6 months, but I have talked to some people who have been able to use it, and they have all said it has been mostly easy to use.
