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Emerging Payments

M-Pesa Creator Safaricom Starts Mobile-Loan Service

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

Safaricom, in which Vodafone Plc owns a 40 percent stake, is the inventor of M-Pesa, the mobile money-transfer system that is used to transact 80 billion shillings ($931 million) a month, according to the company. More transactions are carried out using M-Pesa within Kenya than are processed globally by Western Union Co., 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.

The new mobile-loan service is branded M-Shwari, which means all is well in the local Swahili language. The facility also lets clients operate a savings account with deposits earning as much as 5 percent interest annually, Safaricom Chief Executive Officer Bob Collymore told reporters today in Nairobi, the capital. The product will provide access to financial services to the more than half of Kenya’s population who are “unbanked,” he said.

“Just once click on your phone and you will have a bank account at no cost,” Collymore said in an e-mailed statement.

M-Shwari users will be eligible for loans after at least six months of using the service and all loans are payable within a month of disbursement, Collymore said. Safaricom and CBA will offer users loan 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 2011 from 1.24 trillion shillings a year earlier, while gross loans during the period grew 30 percent to 1.2 trillion shillings, according to Central Bank of Kenya’s annual report. The number of loan accounts increased to 2 million from 1.74 million in the same period, it said.

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

Safaricom announced yesterday that it partnered with British American Insurance Co, a unit of British American Investments Co., and Chagamka, a closely held Kenyan company, to introduce a “low-cost” medical-insurance product that lets customers finance health-care services through their phones.

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