In July 2022, the Central Bank of Kenya blocked a plan by Safaricom to offer Kenyans M-Pesa zero interest loans.
CBK reportedly blocked the service dubbed as Faraja from launching on the day it ws supposed to launch, and 8 hours to the start of the service.
The Central Bank reportedly claimed that service was still under regulatory review and that Safaricom needed to slam brakes on the launch.
The new loan product was expected to be one of a kind in the Kenyan market. It was supposed to work under Lipa na M-Pesa and would allow Kenyans to buy goods and services on credit without incurring interest fees.
By the time CBK ordered for the program to be halted, Safaricom had already sent out invites for the launch. Safaricom had also uploaded the terms and conditions of how the loan service would be accessed. It had also provided the USSD code that Kenyans would use to view their loan limit.
“Faraja was to be offered by EDOMx in partnership with Safaricom and Equity Bank. As communicated by EDOMx, Farajas’s launch was postponed and a new date will be communicated in due course,” said Safaricom.
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The Faraja product was to be run by financial technology firm EDOMx, Safaricom and Equity Bank. Using Faraja, customers would have been able to purchase products from Sh. 20 to Sh. 100,000.
They would then be required to pay back within a month at no extra charges, hidden fees or dafault penalties.
Safaricom explained that when using Faraja loans, only the normal M-Pesa transaction charges would apply at the point of sale on the product.
To activate Faraja Loans, customers would have only needed to dial Dial *799#, and select OPT in. Once they opt in, customers would be able to perform unlimited transactions up to their credit limit.
Customers who took these interest-free loans would be allowed to make partial repayments before their due dates. These partial repayments would boost their chances of qualifying for higher credit limits.
“To make repayments, you will need to dial *799#. Your transactions will be displayed, you can pay for only one transaction at a time. choose the one you want to pay for, press send,” stated Safaricom.
