Mobile money users to borrow against NSE, sacco shares and salary

Private lending firm, AVL Capital has launched a product that allows for short-term borrowing against Sacco and Securities exchange shares, salary as well business turnover.

Automatically it makes commercial banks, stockbrokers and employers the guarantor of a given transaction that will be done through mobile money platforms.
The product dubbed Pesa na Pesa allows users to do transactions across all mobile money platforms, though transactions are restricted to only one sim-card. Proxima and AVLC group executive chairman, Moses Muriithi said the product would not directly compete with the KCB, CBA and Cooperative banks which have similar platforms.

“Pesa na Pesa will not compete but complement traditional lending through strategic partnerships,” said Muriithi. He affirmed the new product will also exercises inclusivity by partnering with saccos, stockbrokers, banks, SMEs and all players in the financial sector.
The lender has pegged interest rates for the loans at 10 percent, slightly higher than 7.5 percent charged by CBA’s M-shwari. Initially borrowers will be allowed upto 10,000 payable in weekly installments, with larger amounts dependent on type of guarantee given by employer or stock-brokers. “Naturally, it is open to larger amounts and longer periods depending on guarantee given,” according to AVLC Group Chief executive, Andrew Kanyutu.

All loans will be insured to cushion against the unfortunate demise of the borrower while still having the loan. Value of funds transacted through mobile phones stood at Sh 2.4 trillion in 2014 having grown from Sh 1.9 trillion the previous year, according to Central Bank of Kenya (CBK) .

Growth was attributed to push for convenience, security and cost effectiveness of such platforms.

SOURCE:MEDIAMAX