Google – AFP, Daniel Wesangula (AFP), 28 April 2013
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A woman
sells beverages near an advertisement for a new cellphone-based
banking
initiative in Nairobi on April 27, 2013 (AFP, Tony Karumba)
|
NAIROBI —
Six months ago, Jane Adhiambo Achieng walked into a local Kenyan bank with the
hope of getting a loan for her small grocery business.
After
providing all the paperwork and after weeks of back and forth between her and
bank officials, she was turned down.
"They
just told me I don't qualify. My income was too little," said 42-year-old
Achieng, who was asking for some $250 -- about half her monthly turnover -- to
expand her fruit and vegetable stall in the Kenyan capital.
But in
early March, she applied for the same amount through a different source -- and
got the money in a matter of minutes.
She credits
the Kenyan mobile telephone money application called M-Shwari that lent her the
cash for facilitating the growth of her business.
M-Shwari is
a new banking platform that allows subscribers of Kenya's biggest mobile
network, Safaricom, to operate savings accounts, earn interest on deposits, and
borrow money using their mobile phones.
It expands
on Kenya's revolutionary use of sending money by mobile phone -- known as
M-Pesa, "mobile money" in Swahili -- launched in 2007 and now widely
used across the east African nation, where some 70 percent of people have
mobile phones.
With a
minimum transfer of cash set at five shillings -- around five US cents -- the
application revolutionised day-to-day banking for millions left out of the
formal system, and is used for transactions ranging from sending money to
far-away relatives to paying utility bills or even school fees.
Now it is
hoped the new M-Shwari application -- meaning "no hassle" -- can do
the same for savers and borrowers.
"We
have always been thinking of how to move M-Pesa forward. We knew there was a
boundary to be broken and the next frontier was to be reached," said
Nzioka Muita, communications manager at Safaricom, which owns both the M-Pesa
and M-Shwari systems.
Through
this platform, Safaricom says clients can open a bank account, move money in
and out of their savings accounts, and access instant micro-credit of a minimum
of 100 Kenyan shillings -- slightly more than a dollar -- at any time, all
through the mobile phone application.
While loans
must be repaid within a month, a single fee of 7.5 percent is charged, a far
lower interest rate than high-street banks. Maximum loans depend on how much
clients have in their M-Shwari accounts.
The mobile
banking application has been so successful that on its first day of operations
late last year, more than 70,000 new accounts were opened.
"Up to
this point in time, no one in the formal banking sector had thought of
implementing such an idea," said Tiberius Barasa, an economic expert with
Kenya's Institute of Policy Research and Analysis.
"I am
sure that a few bank managers are looking at M-Shwari steadily to see if it is
a potential threat to their business."
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People wait
for a bus near an advertisement for a new cellphone-based
banking initiative in
Nairobi on April 27, 2013 (AFP, Tony Karumba)
|
At least 12
million Kenyans remain outside the formal banking system, according to central
bank estimates.
Safaricom
controls about 70 percent of the Kenya mobile-phone market, translating to some
19 million subscribers. Of those, some 15 million are already M-Pesa users, a
customer base rivalling any banking institution.
On its own,
M-Pesa transactions account for more than $50 million (38 million euros) every
day in Kenya.
"This
is a huge head start for the company," Barasa said.
M-Shwari
was launched in partnership with one of Kenya's privately owned banks, the
Commercial Bank of Africa (CBA), a deal that could see it boost its slice of
the banking sector of east Africa's largest economy.
The family
of newly elected President Uhuru Kenyatta hold the major stake in CBA, which
provides the banking infrastructure for M-Shwari.
Currently,
even with its slightly over $1 billion asset base, it is still some distance
away from east Africa's largest banks, such as Equity Bank, Cooperative Bank
and the Kenya Commercial Bank.
"In a
matter of years, through the sheer volume of transactions that they will be
handling on a daily basis, CBA may become a banking powerhouse in the
region," Barasa said.
Policy
analysts believe that the biggest winners from the M-Shwari service will be
those in the market previously thought unbankable, due to its meagre savings
and individuals located in remote, inaccessible parts of the country.
"This
will greatly change our lives. You can access credit from any part of the
country," Abbas Godana, a school teacher in Kenya's remote eastern Tana
River district, told AFP.
"You
do not have to travel for miles to your bank just to complete some paperwork
and wait for the manager to approve the loan."
Godana's
village, Cha Mwana Muma, is some 30 kilometres (20 miles) from the nearest
shopping centre in which his bank operates a branch -- which, in the
impoverished coastal area, where roads are virtually nonexistent, can take a
whole day to travel.
In February
this year, three months after its launch, transactions on M-Shwari crossed the
$35-million mark, with 1.6 million customers having used the service for
deposits or loans.
M-Shwari
was not the first: telecommunications company Bharti Airtel, an Indian-owned
firm, launched a similar product last year known as Kopa Chapaa -- Swahili for
"borrow money" -- but the product has not had as much impact.
Smaller
micro-credit loan companies have also set up similar schemes.
But
"Safaricom has the numbers," Barasa said. "All they need to do
is ensure that whatever they come up with resonates with the majority of their
subscribers."
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