Safaricom, the Kenyan telecoms giant, is looking to extend its financial services capabilities by collaborating with more banks to create a credit marketplace. The goal is to offer high-value loans without the burden of capital risk and to reverse its dwindling earnings. Presently, Safaricom only provides overdrafts that must be repaid within 30 days, but the firm is aiming to start providing term loans.

Safaricom’s Fuliza product, launched in 2019 with KCB and NCBA, enables users to complete transactions when they don’t have adequate funds in their M-Pesa. Recently, Safaricom introduced Fuliza ya Biashara, a service that allows traders to gain unsecured credit by overdrawing on M-Pesa business tills to cover short-term cash flow shortfalls.

By not taking on the risk of the balance sheet, Safaricom can expand its foothold in the financial services sector without requiring a Central Bank of Kenya banking license. Safaricom’s cumulative service revenue within the financial year that ended March 2023 increased by 5.2 percent to Sh310.9 billion, with M-Pesa accounting for Sh117.19 billion or 41.5 percent. M-Pesa’s latest share in service revenue is the highest in the company’s history, as voice and messaging revenue has been decreasing due to customers’ preference for over-the-internet calls and messaging apps.

In a recent interview, Safaricom’s CEO, Mr. Peter Ndegwa, revealed that the company plans to team up with more banks to provide term loans, rather than solely giving overdrafts. Ndegwa believes that expanding the number of banks lending through their platform could allow the company to offer overdrafts or term loans to merchants. This new approach will upgrade the Fuliza product and enable Safaricom to offer high-value loans without the need to build its balance sheet.

Safaricom’s net profit for the financial year ended March 2023 declined by 22.2 percent to Sh52.48 billion, down from Sh67.49 billion in the previous year, mostly due to increased operating expenses. Safaricom has been transitioning its business model away from voice and messaging, whose share in total revenue has been decreasing.