Sylvia Duruson
Safaricom, Kenya’s leading telecommunications company, has partnered with local fintech firm Pezesha to introduce a groundbreaking credit product called Mkopo wa Pochi. This new offering targets small business owners, allowing them to access loans directly through their M-PESA business accounts.
Mkopo wa Pochi complements Safaricom’s existing loan products, including M-Shwari and Fuliza. The service is now accessible via an update to Safaricom’s M-PESA super app. It integrates seamlessly with Pochi la Biashara, Safaricom’s business wallet designed for small enterprises.
This collaboration marks Pezesha’s debut in Kenya’s mobile money market, granting the fintech access to Safaricom’s vast customer base of over 32.4 million active M-PESA users. The partnership leverages Safaricom’s established infrastructure and Pezesha’s financial technology expertise to provide a tailored solution for small business owners.
Loans offered through Mkopo wa Pochi come with a one-time access fee of 2.76% on the borrowed amount. Borrowers are given a 7-day repayment term, with an option to extend for an additional week. The extension incurs a one-time fee of 3.85% for the entire 14-day period. Late repayments are subject to a daily penalty of 1% for up to 7 days, encouraging timely repayments.
To determine loan eligibility, Pezesha employs a comprehensive approach. The fintech utilizes various tools, including credit bureaus, to identify potential loan defaulters. Additionally, they analyze the borrower’s business transaction history with Safaricom, mobile money account activity, credit information from the Credit Reference Bureau, and overall market conditions. This multi-faceted assessment aims to ensure responsible lending practices while meeting the needs of small business owners.
Pezesha’s recent acquisition of a $500,000 Technical Assistance grant from the United States International Development Finance Corporation (DFC) in May 2024 further enhances its capabilities. This grant enables Pezesha to leverage advanced computing technologies for improved credit scoring algorithms, potentially benefiting the Mkopo wa Pochi product.
The introduction of Mkopo wa Pochi addresses a critical need in Kenya’s small business sector. Many entrepreneurs face challenges in accessing traditional banking services and credit facilities. By offering loans directly through M-PESA business accounts, Safaricom and Pezesha are providing a convenient and accessible financial solution.
This initiative aligns with the growing trend of mobile money services expanding beyond basic transfer and payment functionalities. By incorporating lending features, M-PESA continues to evolve as a comprehensive financial platform for Kenyan consumers and businesses alike.
The partnership between Safaricom and Pezesha showcases the potential for collaboration between established telecommunications companies and innovative fintech startups. Such collaborations can lead to the development of products that address specific market needs while leveraging existing infrastructure and customer bases.
As the service rolls out, it will be interesting to observe its impact on small businesses in Kenya. The success of Mkopo wa Pochi could potentially influence similar products in other markets, particularly in regions where mobile money services play a significant role in the financial ecosystem.
