Safaricom unveils Faraja M-Pesa loans

The zero-interest credit program for purchases of items up to Ksh100,000 has now been made available by Safaricom after being initially prohibited by the financial regulator.
The credit service, Faraja, is anticipated to shake up the market for mobile loans, which has been dominated by products like Fuliza, an M-Pesa-based mobile overdraft service.
More than 32 million Safaricom subscribers will be able to use the service to make credit-based purchases from merchants using the telco’s Lipa Na M-pesa system.
Customers would be able to make purchases between Ksh20 and Ksh100,000 with no interest rates and finish the payment within 30 days.
“When a consumer wants to make a purchase but is currently short on cash, many firms miss out on those purchases.” According to Peter Ndegwa, CEO of Safaricom, “We are happy to partner with EDOMx to offer Faraja, empowering any business to grow their sales by enabling their customers to buy now and pay later.”
According to Julian Kyula, CEO of EDOMx, “it was clear from research into the worldwide merchant and consumer business that there is a sizable digital community that will value our product offering, including our zero interest initiative, plus much more in boosting loyalty and customer-focused programs.”
Faraja is a collaboration between Safaricom and the financial technology company EDOMx Ltd., based in Kenya.
Currently, City Walk, all Naivas Supermarket locations, Goodlife pharmacies, and other retailers offer the service. Businesses on Faraja will instantly after a customer makes a payment using the service receive complete payment for a good or service.
More than 606,000 firms on Lipa Na M-PESA will be able to access the Faraja service through EDOMx thanks to Safaricom, which is listed on the Nairobi Securities Exchange (NSE). The businesses will be responsible for a negotiated facility cost.
Businesses will be given credit by EDOMx on the product so they can get paid right away when a buyer buys Faraja.
After EDOMx received approval to operate as a provider of digital credit in March, the Central Bank of Kenya approved the product’s introduction.
Regulations that were established last year permit the central bank to regulate fintech in order to prevent predatory lending and privacy violations by consumers.