Mshwari is a new mobile payment system that allows to save and borrow money through the phone while earning interest on money saved. It is an attractive offer for Kenyans with little income and small businesses.
Mobile network operator Safaricom introduced the Mshwari credit service three years ago. Today it has some 10 million customers. One of them is Philip Anzugira. Thanks to Mshwari the carpenter was able to start his own business.
Wood and tools are costly in Kenya. Before he could produce anything, Philip Anzugira always needed a customer willing to pay in advance. This has changed since he started using the mobile credit service Mshwari. Whenever Philip Anzugira has some earnings, he stops at a neighborhood branch of his mobile provider. As soon as he deposits some money, he can borrow up to double that amount. The money is debited to his mobile phone account.
For years, Kenya's banks ignored the microloan sector, until mobile network operators proved that it can be very profitable. Their competitors are now trying to set up rival microloan systems. This could mean cheaper loans throughout Kenya, which could boost economic growth.