Safaricom subscribers who borrow from the telecommunications firm’s overdraft service namely Fuliza will have to pay extra fees after the telco increased daily interest fees.
Subscribers on Tuesday started receiving messages on their mobile phones notifying them of the increase.
Safaricom said it had increased the interest rates after the 2021 Finance Act which came into effect on July 1, 2021, after President Uhuru Kenyatta signed it into law.
“Following the signing of the Finance Act 2021, starting July 6th, 2021 Fuliza daily fees will include 20% Excise Duty. Access fees remain at 1%. Dial *234# for the revised Fuliza charges,” the message sent to subscribers read.
Fuliza allows customers to complete M-Pesa transactions when they have insufficient funds.
The debt is recovered from M-Pesa balances automatically, but subscribers who do not settle their overdrafts within 30 days are barred from using their unused credit limit until they pay the outstanding amount.
Safaricom charges Fuliza customers a one-off 1.083 percent interest and a daily administrative fee that depends on the outstanding balance.
The default rate for Fuliza overdraft is usually very low since the debt is settled instantly when the customer’s M-Pesa wallet receives money.
Fuliza was introduced in 2019 and is popular among low-income earners who take small loans for their daily needs, with the debt typically settled after sales are made or wages received.
The Fuliza fee starts from Sh2 daily for Sh100 overdraft and goes up to Sh30 per day for Sh2,500 and above.
At the same time, due to the passing of the same act, Safaricom also raised the cost of calls by 30 cents and SMS by 10 cents. It also increased the cost of fibre services.
In June, MPs through the departmental committee on finance and national planning proposed to increase the rate of excise duty on telephone and internet data services from 15 percent to 20 percent.
An increase at the rate of the excise duty will see the tax man collect more than Sh8 billion from Safaricom, Airtel and Telcom which are Kenya’s leading telcos.
Kenyatta signed the Finance Act to fund the 2021-2022 fiscal budget. The government aims to raise at least 1.5 trillion Kenya shillings ($13.8 billion) from new taxes according to the Treasury Department.