Shwari” means calm in Kiswahili, yet M-Shwari, a bank account offering a combination of savings and loans, has taken the Kenyan market by storm. Offered as a collaboration between the Commercial Bank of Africa (CBA) and mobile network operator (MNO) Safaricom through its ubiquitous mobile money service M-PESA, M-Shwari has piqued the interest of mobile money watchers looking for the next innovation to drive financial inclusion globally. M-PESA is rightly lauded as a global success story
Before applying for a loan, you should know that:
1 M-shwari charges 7.5% facilitation fee each month when you fail to pay your loan on time. If you pay within 10 days a certain percentage of your applied loan is returned to your account
2 You will not access loans from M-shwari if you do not pay within 60 days. The period will be for around 30 days. However if you are blacklisted by CRB, you loans limit will read 0.
3 Did you know you can increase your loans limit? Saving and transacting money frequently on M-shwari will increase your loan limit instantly.
4 For a new customer on M-shwari, a minimum of Ksh 300 is offered. The amount may increase or decrease depending on your activities on the service.
4 CBA uses Safaricom data to score potential clients.
With M-Shwari, a customer’s Safaricom phone and M-PESA usage history is used to develop a credit score. CBA uses an algorithm based on customer use of Safaricom services to assess credit-worthiness, assign individual credit limits, and lend to new M-Shwari applicants
5 In case of non-payment, the customer relationship with Safaricom and the M-PESA service is left largely undisturbed.
No airtime or M-PESA balance will be transferred to the loan without the customer’s consent. If the loan is not repaid by day 31, it is automatically renewed for an additional 30 days, and the customer receives a text letting her know that if the loan is not repaid, it will be reported to the credit bureau as required by law. If the loan remains unpaid, a second reminder is sent on day 60, a third and final reminder is sent on day 90, and the loan is reported on day 120. The late repayment will remain on the credit bureau for five years, but once the balance is cleared, the status will change to paid.
6 CBA reports non-performing loans of 2% over 90 days.
For an unsecured loan offered remotely over the mobile channel, non-performing loans of 2% is rather impressive. Although it started out higher at launch, refinements in the credit scoring, new data based on use of M-Shwari savings and repayments, and better understanding about implications of being reported to the credit reference bureau have helped bring down non-performing loans.