In the fast-paced SME world in Kenya, a key enabler for businesses is M-PESA.
The platform has enabled many businesses to keep track of their payments through different solutions, the M-PESA paybill, till number or Pochi la Biashara.
For most of these businesses, they mostly transact in cash or M-PESA so if they are in a capital fix, they lack financial statements to be able to access loans from banks.
“Most business people use cash, but cash may have its challenges like it doesn’t have statements. You can do business for a very long time but you don’t have a statement and there is no way you can get a loan,” said Lawrence Muhia, Lamaze Collections founder.
Another entrepreneur, David Njoroge shares the same sentiments with Lawrence adding, “Every business has a capital challenge , because if we had enough capital, we would have done many other things, for sure sometimes you struggle with the stock and sometimes you also don’t have money.”
With this in mind, the M-PESA team tailored business credit solutions for SMEs.
Businesses will have access to credit through an overdraft facility, Fuliza Biashara and a Term loan ‘Taasi Till’. Taasi Till is a business credit offers short-term credit ranging between Kshs 1,500 to Kshs 250,000 depending on eligibility.
Through Fuliza Biashara, Lipa na M-PESA Merchants can draw multiple overdrafts from a minimum of Kshs 1000 to Kshs 400,000 based on their assigned limit. As part of the revamp, merchants will now be able to repay their overdraft flexibly recovered when there’s inflow on the till to allow business continuity. The credit solutions are available via the M-PESA Business App or USSD *234#.
For businesses using Pochi la Biashara, ‘Taasi Pochi’ offers credit ranging from KES 1,000 to Kshs 250,000, available immediately on the Pochi wallet via the M-PESA App or USSD *334*8#.
To be eligible for credit for ‘Taasi’ and Fuliza Biashara, merchants must have had active tills or Pochi wallets for more than six months. Upon approval, funds are deposited directly into the user’s M-PESA wallet with flexible repayments periods of between 14 and 30 days.
To bring this product to life, M-PESA partnered with various financial institutions including KCB, Diamond Trust Bank, Sidian Bank and Absa Wezesha stock loan.
By increasing access to affordable credit to Kenya’s entrepreneurs especially those in the informal sector, Safaricom and its partners target to drive financial inclusivity and unlock opportunities.
Watch the video below to learn more about the development of this product.
