- When Safaricom launched Fuliza in 2019, it was marketed as a digital innovative way to help Kenyans complete transactions even when their M-Pesa wallets were empty.
- In short, Fuliza can remain a useful tool for millions of Kenyans, but only if it evolves from being a financial trap into a genuine lifeline.
- Options such as partial repayments, reasonable grace periods, or structured payment plans would give users breathing space while still honoring their obligations.
Fuliza is Safaricom’s overdraft facility in partnership with NCBA and KCB. When Safaricom launched Fuliza in 2019, it was marketed as a digital innovative way to help Kenyans complete transactions even when their M-Pesa wallets were empty. For millions of users, it has become a financial lifeline. In fact, according to Safaricom’s annual reports, Fuliza disburses billions of shillings every month, making it one of the largest credit platforms in the country.
Its appeal is obvious: no paperwork, no guarantors, no waiting. Whether you are short of Ksh 50 for bus fare or Ksh 1,000 for a medical emergency, Fuliza is there — instantly. In a country where formal banking remains inaccessible to many, Fuliza provides financial inclusion at the touch of a button.
However, beneath this convenience lies a troubling reality. Fuliza is arguably the most expensive loan in Kenya, not only because of the daily charges attached to it, but also because of its ruthless repayment model: any money that enters a borrower’s M-Pesa account is deducted instantly, often before the borrower even gets a chance to use it.
Hidden Cost of “Convenience”
Unlike traditional bank loans where interest is calculated annually or monthly, Fuliza charges daily fees that can quickly balloon into exorbitant costs. Depending on the amount borrowed, these charges range between Ksh 10 and Ksh 36 per day. On paper, these numbers look small, but in practice, they translate into some of the highest effective interest rates in Kenya.
Consider this: borrowing Ksh 500 on Fuliza and holding it for 10 days attracts daily fees of Ksh 10. That means you pay Ksh 100 on top of the principal — a 20% cost in just ten days. If projected on an annual basis, the implied interest rate would be astronomical, surpassing the caps that regulators impose on commercial banks.
For borrowers who live paycheck to paycheck, these daily charges pile up silently, draining limited income and perpetuating dependence on the very service they think is saving them.
Instant Deduction Trap
The most criticized aspect of Fuliza is not just its cost but its repayment method. Unlike bank loans, which allow scheduled repayments, Fuliza takes control of a borrower’s account. The moment money lands in an M-Pesa wallet — whether it’s a salary, a gift from a relative, or payment for services — Fuliza deducts what is owed, immediately and automatically.
This means that borrowers often never get to use their own money. A worker who has borrowed Ksh 1,500 on Fuliza might receive their salary of Ksh 5,000, only to find Ksh 1,500 plus accumulated charges gone instantly. What remains is hardly enough to cover rent, food, or school fees.
This automatic deduction leaves borrowers trapped in a cycle of financial frustration. Instead of empowering users, Fuliza locks them in dependency, with each inflow becoming a repayment and each repayment creating fresh demand for another overdraft.
Why Fuliza Feels Unfair
The unfairness of Fuliza lies in its lack of flexibility. While banks may negotiate repayment schedules or restructure loans, Fuliza offers no such breathing space. The borrower is at the mercy of Safaricom’s automated system.
Moreover, Fuliza disproportionately affects low-income earners who rely on small, frequent mobile transactions. For them, a Ksh 10 daily fee is a significant penalty. Instead of serving as a stepping stone to financial empowerment, Fuliza deepens vulnerability.
Critics argue that Fuliza exploits poverty. It is not the rich or the middle class who borrow Ksh 100 or Ksh 500; it is the poor, the hustlers, the small-scale traders, and the unemployed youth. These are the very groups least able to afford predatory charges.
Regulation and Consumer Protection
The Central Bank of Kenya (CBK) has in recent years tightened rules around digital lenders, many of whom were accused of charging outrageous interest rates and harassing borrowers. Some apps were even forced to shut down or restructure their models.
Yet, despite being the largest digital credit facility in Kenya, Fuliza has largely escaped the same scrutiny. Safaricom maintains that Fuliza is not a loan but an overdraft facility — essentially a service fee for helping customers complete transactions. This categorization allows Fuliza to sidestep interest rate caps and stricter lending regulations.
But the question remains: if Fuliza behaves like a loan, looks like a loan, and charges like a loan, shouldn’t it be regulated like one? Consumer rights advocates argue that Fuliza’s charges should be disclosed transparently as interest, with caps similar to bank lending rates.
The Counterargument
From Safaricom’s perspective, Fuliza is a success story in financial inclusion. The company points out that millions of Kenyans now complete essential transactions — paying bills, sending school fees, buying food — thanks to Fuliza. For them, it is not about the cost but about access.
Safaricom also argues that customers willingly opt into Fuliza and can choose not to use it. In their view, Fuliza is a convenience, not coercion. And the numbers back the business case: Fuliza generates billions of shillings in revenue annually for Safaricom and its banking partners.
But herein lies the tension: should a service that is marketed as empowering also be allowed to extract disproportionate wealth from the very people it claims to help?
The Bigger Picture
Fuliza is more than a financial tool; it is a mirror reflecting Kenya’s deeper economic struggles. Its popularity reveals just how many Kenyans live on the edge, unable to make ends meet without borrowing small amounts daily. It is the financial face of inequality, where poverty drives people into debt traps disguised as convenience.
Instead of lifting people out of hardship, Fuliza risks cementing their struggles. The poorest Kenyans, who can least afford the costs, are the ones fueling Safaricom’s multi-billion-shilling Fuliza profits.
This raises an uncomfortable question: Is Kenya’s most celebrated tech innovation becoming an engine of economic exclusion rather than inclusion?
And Finally…..
If Fuliza is to continue serving Kenyans in a fair and sustainable manner, several reforms are urgently needed. First, the Central Bank of Kenya must step in and classify Fuliza as a loan, subjecting it to the same rules that govern banks. This would ensure that interest rates are capped and that disclosure requirements are strictly enforced, protecting consumers from hidden costs.
Equally important is the need for transparency. Safaricom should clearly present Fuliza charges in a way that ordinary customers can understand, showing the true equivalent interest rates rather than disguising them as service/access fees. Only then can borrowers make informed financial decisions.
Consumer protection must also take center stage. Instead of the rigid system of instant deductions, borrowers should be allowed repayment flexibility. Options such as partial repayments, reasonable grace periods, or structured payment plans would give users breathing space while still honoring their obligations.
In addition, Kenya needs to strengthen financial literacy. Many citizens are unaware of the long-term costs of repeatedly relying on Fuliza. Community-driven financial education programs can help promote saving habits, encourage responsible borrowing, and reduce dependence on expensive overdraft facilities.
Thus, the government and financial institutions should develop alternative solutions. Affordable micro-credit schemes, cooperative savings groups, and innovative digital lending models can empower low-income households without exploiting them. By offering fairer options, these initiatives would not only protect consumers but also contribute to greater financial inclusion.
In short, Fuliza can remain a useful tool for millions of Kenyans, but only if it evolves from being a financial trap into a genuine lifeline.
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The Author is a Professor of Chemistry at University of Eldoret, a former Vice-Chancellor, and a Higher Education expert and Quality Assurance Consultant. Contact: okothmdo@gmail.com
