mzeiya
Elder Lister
Following this post by @Cassey Tash: https://kenyanlist.net/index.php?threads/broke-kenyans-take-a-record-245billion-fuliza-loans.12749/ I thought it would be good to share the following thread..
On the Safaricom website under FAQs for fuliza they have clearly indicated that you will be charged a one-off interest rate of 1.083% and a daily administrative fee on the outstanding balance ranging from KES 2-30 for a limit of 0-70k
Those numbers don’t look bad right? WRONG
In essence, what that really means is that while a bank will give you an annual rate of not more than 13.6(currently the highest by Jamii bora bank as per CBK website June report), Safcom will give you an annualized rate of 395.2% per year
Compare this with their other products like Mshwari that charge a 7.5% standard fee(not revolving on outstanding balance like fuliza) which is essentially around 90% per year(still high but incomparable by a long shot)
What this means In numbers exactly is this:
If you borrow 1000 from mshwari you’ll part with around 56 bob interest
If you borrow the same 1000 with fuliza you’ll part with around 244 bob
This is if both debts last 30days
Those numbers are INSANEEE
And of course, this real cost of debt is never mentioned much lest Kenyans know they are not paying that 1.083% or the 7.5% for fuliza. It’s bad for business duhhh.
They choke it down to product differentiation but it’s purely extortionist.
Safaricom's fuliza is no different from all these digital lending apps that are all over Kenya burdening the majority of Kenya’s poor with debt that can only be classified as slavery now. That’s why big papers like financial times call this ‘perpetual debt in the silicon savanna.
And another thing that makes it all the more disturbing is that it does not fall under Kenya Bankers Association so it is not a regulated product like what banks offer so they will inflate that interest rate to their hearts desires without any repercussions in the long run.
Safcom is essentially a telco that is now offering financial services but doesn’t want to be classified as such and can’t according to the law. Communications authority powers are limited to their communication services. So who gon check them? NOBODY!
It’s attractiveness and addictiveness comes from the fact that it is so easily accessible on your phone, it’s the size and brand clout, lack of disclosure of the actual full interest in its terms and conditions(the 1.083% ni ya kufumba macho honestly), and the icing on the cake.
You can’t be listed under CRB for not paying fuliza the way you would by banks and the digital mobile lending apps. They will just keep racking up your debt the more you don’t pay and it’s a classic debt trap.
They simply offer customers a means to buy time, but at a premium so costly it would be illegal for a Kenyan bank. Ni hayo tu kwa Sasa. Let me go back to my books now.
On the Safaricom website under FAQs for fuliza they have clearly indicated that you will be charged a one-off interest rate of 1.083% and a daily administrative fee on the outstanding balance ranging from KES 2-30 for a limit of 0-70k
Those numbers don’t look bad right? WRONG
In essence, what that really means is that while a bank will give you an annual rate of not more than 13.6(currently the highest by Jamii bora bank as per CBK website June report), Safcom will give you an annualized rate of 395.2% per year
Compare this with their other products like Mshwari that charge a 7.5% standard fee(not revolving on outstanding balance like fuliza) which is essentially around 90% per year(still high but incomparable by a long shot)
What this means In numbers exactly is this:
If you borrow 1000 from mshwari you’ll part with around 56 bob interest
If you borrow the same 1000 with fuliza you’ll part with around 244 bob
This is if both debts last 30days
Those numbers are INSANEEE
And of course, this real cost of debt is never mentioned much lest Kenyans know they are not paying that 1.083% or the 7.5% for fuliza. It’s bad for business duhhh.
They choke it down to product differentiation but it’s purely extortionist.
Safaricom's fuliza is no different from all these digital lending apps that are all over Kenya burdening the majority of Kenya’s poor with debt that can only be classified as slavery now. That’s why big papers like financial times call this ‘perpetual debt in the silicon savanna.
And another thing that makes it all the more disturbing is that it does not fall under Kenya Bankers Association so it is not a regulated product like what banks offer so they will inflate that interest rate to their hearts desires without any repercussions in the long run.
Safcom is essentially a telco that is now offering financial services but doesn’t want to be classified as such and can’t according to the law. Communications authority powers are limited to their communication services. So who gon check them? NOBODY!
It’s attractiveness and addictiveness comes from the fact that it is so easily accessible on your phone, it’s the size and brand clout, lack of disclosure of the actual full interest in its terms and conditions(the 1.083% ni ya kufumba macho honestly), and the icing on the cake.
You can’t be listed under CRB for not paying fuliza the way you would by banks and the digital mobile lending apps. They will just keep racking up your debt the more you don’t pay and it’s a classic debt trap.
They simply offer customers a means to buy time, but at a premium so costly it would be illegal for a Kenyan bank. Ni hayo tu kwa Sasa. Let me go back to my books now.
