Telecommunications firm Safaricom is preparing to launch interest-free instant loans that were blockes by the Central Bank of Kenya in 2022.
According to Safaricom chief executive officer Peter Ndegwa, the telco has been addressing concerns that were raised by the CBK.
“I am sure it will show up. We needed to change a few things. We will bring it back. It needs to be approved normally just in the same way CBK approves (other products). It is a use case that customers want. You will see it come back,” said Ndegwa.
Dubbed Faraja, the loan service will be a collaboration between Safaricom, EDOMx Ltd, a Kenya-based financial technology firm, and Equity Bank.
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 was 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.
Why CBK blocked M-Pesa zero interest loans from launching
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 had explained that when using Faraja loans, only the normal M-Pesa transaction charges would apply at the point of sale on the product.
For a 30-day loan cycle, the loan would be due on the 30th day and likewise, the 7-day loan would be due on the 7th day after the loan is given.
