Kenya's digital credit market is witnessing a significant shift as Safaricom's Fuliza overdraft facility emerges as the dominant player, leaving other providers trailing behind.

The Competition Authority of Kenya (CAK) revealed in its credit market inquiry that the entry of Fuliza has led to the gradual exit of other digital credit providers from the microloan segment.

According to the CAK report, while M-Shwari remains a commonly used loan product, Fuliza has surged ahead in terms of active users, marking a rapid expansion since its launch in January 2019.

“While M-Shwari is the loan product most commonly used, Fuliza recorded the most active users, demonstrating its rapid expansion since being launched in January 2019. During this period, every other provider’s loans grew in size, suggesting a degree of market segmentation took place,” the CAK report stated.

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The report notes a remarkable growth in Fuliza's disbursements, which soared by 232 per cent between January 2019 and March 2020.

This growth outpaced the overall market, which saw a 213 per cent increase in total disbursements during the same period.

Among the five digital credit providers assessed, three experienced a decline in the number of loan facilities disbursed, while two witnessed a slump in the total value of disbursements.

Moreover, all providers saw an increase in the average size of loans, with Fuliza's loan size experiencing a minor dip to Sh642.4.

In the six months leading to September last year, the value of Fuliza disbursements surged by 32.8 per cent to Sh419.2 billion, with the number of distinct users reaching 7.5 million.

However, despite the increase in disbursements, Safaricom's earnings from the platform dropped by 40.3 per cent to Sh2 billion because of a tariff reduction aimed at encouraging greater customer usage.

Fuliza, a joint venture between Safaricom and lenders NCBA and KCB, enables M-Pesa customers to complete transactions even when their accounts lack sufficient funds. 

Alongside other products like M-Shwari and KCB M-Pesa, Fuliza has reshaped the digital credit market landscape, cementing its position as the go-to microloan provider in Kenya.