M-Shwari & KCB M-PESA Since the Commercial Bank of Africa (CBA) and Safaricom launched M-Shwari in late 2012, a mobile phone based savings and loan product, there has been a lot of buzz about how it has helped to scale formal financial inclusion, scoring Kenya another first at the global stage. On 6thMarch 2015, it was reported that CBA had signed the 10 millionth customer to M-Shwari, having handled a total of Sh153 billion in deposits. This is no small feat for a product just 2 years old. M-Shwari has received a lot of attention, locally and internationally. Now,the first rival product, the KCB M-PESA account, has hit the market. The question is, could it steal the show?
On Tuesday March 10, 2015, Safaricom and KCB jointly launched theKCB M-PESA account. Safaricom’s CEO made it clear that the exclusivity clause with CBA had elapsed, so they are free to pursue strategic partnerships with other banks.
The KCB M-Pesa account had registered 640,000 subscribers in three weeks, translating to an average of 40,000 sign-ups a day, according to a media release available on the bank’s website. In that same period, customers deposited KShs 36 million,and borrowed KShs 380 million. The average loan was KShs 3,500, according to the release. In total, KShs 90 million moved from M-Pesa to the KCB M-Pesa account in the same period, while transfersfrom KCB M-Pesa to M-Pesa were KShs 380 million.
The features of the KCB-M-PESA account largely mimic the M-SHWARI product, but a few differences in amounts and rates and repayment structures exist, as the following table demonstrates:
M-PESA and KCB bank branch (over the counter)
Not possible, except via M-PESA wallet; M-Pesa to M-Shwari and vice versa is free. M-Pesa daily limits apply to M-Shwari.
Feature available; M-PESA limits and transfer charges apply
Min. Kshs. 100 (Maximum depends on your loan limit)
KShs. 50 to KShs. 1M
1 month (or 2 if rolled over)
1 month, 3 months and 6 months
Loan interest/Facility fee
7.5% facilitation fee on the amount borrowed
30 day loan at 4% per month (4%) • 90 day loan at 3% per month (9%) • 180 day loan at 2% per month (12%)
7.5% facilitation fee on the outstanding balance
No rollover fee but interest will continue to be charged on the outstanding balance
Feature not enabled
Automation and recovery of overdue loans from KCB M-PESA account, followed by existing KCB account and lastly from M-PESA
Fixed deposit account
Locked savings available, and lock period decided by customer
Allow customers to lock a specific amount of cash for a certain period of time (Locked periods: 1, 3, 6, and 12 months with minimum amount of Ksh. 500)
Interest rates for locked/ Fixed funds
Ranges between 2-6% dependent on the amount saved.
The interest earned for the KCB M-Pesa isn’t specified. Upon early or premature redemption the customer forfeits all interest accrued
Not a separate product but locked savings product enables additional deposits.
Allow customers to set a target and make deposits towards achieving their target. (Target Periods: 1, 3, 6 and 12 months with minimum contribution of Ksh. 50 at an interest rate of 3%, 4%, 5%, 6% respectively). The customer is allowed 4 withdrawals to maintain interest.
STK (sim toolkit): strategically sits on the M-PESA menu
Via *844# USSD code
Credit limit can be checked as soon as the first deposit is made.
Customer may be informed of credit limits before a deposit is made.
Instantly transferred to personal M-PESA wallet
Loan amount sits with KCB-M-PESA account until you transfer to M-PESA
PIN to access service
Same as M-PESA since M-Shwari is STK-based
Sent by text message after account is opened and then can be reset by customer
Combination of two brands; sub-products named after traditional banking terminology
Calculated upfront and due at the end of the loan
Added to the principal amount borrowed on a monthly basis
M-Shwari savings frozen, negative impact on credit limits and reporting to the credit bureau
Reporting to the credit bureau
So what are the key differences?
The KCB M-PESA account has more features than M-Shwari. In addition to loading the account through M-PESA, one can still access it through any KCB branch or agent. This means it is possible to set up standing orders for convenience.
We have heard M-Shwariusers complain about the low loan limits. This has been addressed by the KCB account, which has set the maximum loan to 1M.The KCB M-Pesa account has also upped the maximum repayment term to 6 months, compared with M-Shwari’s maximum term of one month, or two if rolled over.M-Shwari customers have reported difficulties in repaying their loans in a month, especially in emergencies when it takes them time to recover financially.
The KCB account’s monthly interest rate depends on the loan tenure, from 2% for a 6-month loan to 4%, for a1-month loan. This is an interesting offer by KCB.
When you apply to M-Shwari for a loan and it is approved, the funds are disbursed directly to your M-Pesa wallet. With KCB M-Pesa, funds are disbursed to the customer’s KCB M-Pesa account before they can be transferred to M-Pesa. However, when it comes to repaying the M-Pesa loan, KCB auto-debitscustomers’ accounts, looking first from the KCB M-PESA wallet, and if there is not enough funds, then any other existing KCB account and lastly M-Pesa. M-Shwari loans have to be manually repaid; sometimes the customer may not remember the exact date of repayment or the exact amount.
As Kenyans decide which product suits them best, they will spur competition amongst the banks to better serve the population, and thus help to shape the future of micro-savings and micro-loans.
Enable you open and operate an M-Shwari bank account through your mobile phone, via M-PESA, without having to visit banks or fill out any forms.
Provide you the ability to move money in and out of your M-Shwari savings account to your M-PESA account at no charge.
Give you an opportunity to save as little as KSHs.1 and earn interest of up to 6.65% p.a on your saving balance. This cash is moved into the savings account via M-PESA.
Enable you to access micro credit product (loan) of a minimum of KSHs.100 any time and receive your loan instantly on your M-PESA account charged at a facility fee of 7.5%
Save for a fixed period of time (Lock Savings Account) and earn interest of up to 70% of the Central bank Rate.
This is a product for everyone who feels that banking should be hassle-free. No forms to fill in, no branches to visit. Just one click on your phone and you have a savings account!
How to sign up
Access through the M-PESA menu > Select Loans and Savings > Select M-PESA and Activate.
The M-Shwari Deposit Account is a micro-savings product which allows you to securely store your money for a specific purpose or for an unexpected event in your life. Enjoy the following features when you save with M-Shwari:
No minimum balance
No charges levied on the account
No charges for moving money from M-PESA to M-Shwari account and vice versa
In line with the Banking (Amendment) Act 2016, all deposits on M-Shwari will earn interest of up to 70% of the Central Bank Rate
All deposits on M-Shwari will earn interest as below
The M-Shwari savings interest is calculated daily and paid out quarterly into the M-Shwari deposit account.
Customer Savings Amount
M-SHWARI INTEREST RATE
The M-Shwari Loan Account is a micro-credit product which allows you to borrow money in times of need or to complement your savings towards an investment or enterprise. A one-time fee of 7.5% is levied for each loan. Borrow with M-Shwari and start to build your credit history today.
In order to qualify for a loan all you need is to be an M-PESA subscriber for 6 months, save on M-Shwari and actively use other Safaricom services such as voice, data and M-PESA. To enquire how much you can borrow, go to M-Shwari, Loan, check Loan Limit.
You can access loan limits from as low as Ksh.100 and up to Ksh.50,000.
Enjoy repayment period of one month.
Loan repayment can be made via M-PESA, or from the M-Shwari account.
How does it work?
Access the M-PESA menu.
Select Loans and Savings.
Enter your M-PESA PIN
Loan amount will be sent to your M-PESA Account. The loan amount to be paid will be in inclusive of the facility fee.
Lock Savings Account
This is a savings account that allows M-Shwari customers to save for a defined purpose and for a specified amount of time. The funds saved on the M-Shwari Lock Savings account will be kept in the account until the maturity date; this maturity date is determined by the customer upon opening the account and ranges between one and twelve months. Customers can make micro deposit into this.
The M-Shwari Lock Savings account is ideal for customers looking for higher interest rates and those wishing to keep money away safely for one to six months.
What are the requirements of opening a Lock Savings Account?
One must be an M-Shwari customer in order to access this service.
To join M-Shwari, Go to your M-PESA menu, select “My account” and “Update menu” then go to your M-PESA menu, select Loans and Savings, MShwari, click on activate account and accept terms and conditions.
What are the benefits of opening a Lock Savings Account?
No minimum savings
There are no charges levied on the M-Shwari Lock Savings account.
The interest rate is constant during the investment period, and is calculated and paid out monthly or at maturity.
The Lock period varies from one month to six months depending on the customer needs.
What interest will be payable on the M-Shwari Lock Savings Account?
M-Shwari lock savings interest is earned daily but paid out monthly into the lock savings account.
Customer Savings Amount
Lock Savings INTEREST RATE
How does one access the Lock Savings Account Menu?
The lock savings account can be accessed by going to M-PESA >>Loans and Savings >>M-Shwari>> Lock and selecting, “Lock Savings Account”.
How do I Open and Save into Lock Savings Account?
Go to M-PESA, Loans and Savings, M-Shwari, Lock Savings Account, Open Account, select to save from either M-PESA or From M-Shwari, Enter Target Amount, enter period between 1-6 months, Enter amount to save. You will receive an SMS confirmation that your Lock Savings Account has been set up. Next time you save, go to the Lock Savings option under M-Shwari, select to Save from either M-Shwari or M-PESA, Enter Amount and then your M-PESA PIN to complete your transaction.
How will I know that my money in M-Shwari Lock Savings has matured?
Upon maturity, a notification will be sent to you via SMS from M-Shwari informing you of the amount saved and the interest earned.
Can a customer withdraw their funds before maturity date?
However, a customer will receive the requested money after 48hours. A customer has the option to withdraw the entire amount – Break Lock or make a partial withdrawal of the funds- Partial Break