Kenya: Equity Bank approves Fuliza with a mobile overdraft facility

Equity Bank has introduced a live overdraft feature, allowing borrowers to access up to Sh100,000 in a strategic move to compete with Safaricom’s Fuliza and Faraja offerings.

The product is part of the lender’s move to stir financial inclusivity and boost the conventional market due perceived high level of risk.

The lender’s website reassures customers that they have the flexibility to borrow repeatedly through the bank’s mobile app, Equitel line, or by dialing *247#.

It facilitates transaction completion for Paybill, Till, and person-to-person transactions. Equity Bank’s upcoming credit product closely resembles Faraja, a collaboration between EDOMx Ltd, a Kenyan fintech firm, and Safaricom.

Safaricom, which is listed at the Nairobi Securities Exchange (NSE), is expected to enable EDOMx to offer the Faraja service to more than 606,000 businesses on Lipa Na M-PESA at a negotiated facility fee payable by the business.

After receiving approval from the Central Bank of Kenya (CBK) in March as a digital credit provider, EDOMx is set to launch the new product. This move is anticipated to intensify competition and pose challenges for Fuliza, the pioneering mobile overdraft service in Kenya provided by NCBA, KCB, and Safaricom, especially amid its rapid depreciation.

The Central Bank of Kenya (CBK) gave EDOMx the nod to launch the product after it was cleared as a digital credit provider in March.

The new product is expected to pile more pressure on the rapidly depreciating Fuliza, an inaugural mobile overdraft in Kenya offered by NCBA, KCB and Safaricom.

Safaricom Plc’s recent financial report for the first half of the year revealed a 40% decline in earnings for Fuliza, attributed to borrowers shifting to the more economical state-backed Hustler Fund. Fuliza’s contribution to Safaricom’s overall earnings during the review period decreased from Sh3.4 billion to Sh2 billion compared to the previous year.