The first thing that is very important about M-Shwari is that this is a banking service not just a loans or savings option. But since this is a Loans Website we will focus on the loans part of the M-Shwari Service. Safaricom and CBA are the main corporations that offer M-Shwari to allow the people who use Mpesa to borrow loans and save money at very low interest rates. For example, a loan of Ksh 1000 for a duration of a month will be paid back with the interests of Ksh 75. The limit of the loan that you can get is guided by the amount of money that you save with MShwari. The loan does not require any security and there is no minimum balance for an M-Shwari account.

Eligibility for the Loan

You must be;

• A registered Safaricom Subscriber and M-PESA customer with an active Safaricom M-PESA account/line
• You need to hold any of the following identification documents; Kenya National Identification Document (ID); Kenyan Passport Document ; Alien ID (resident Permit) registered by the Government of Kenya.

Process of Getting M-Shwari Loan

• Go to the Safaricom menu Select  “ M-PESA” Select “Activate or Wezesha”
• The new M-PESA menu with M- Shwari menu will be sent to your line.
• Select the M-Shwari link. A message will appear requesting you to read and accepted the Terms & Conditions ( English: Visit www.cbagroup.com/m-shwari, www.safaricom.co.ke)
• After accepting the terms; an SMS will be sent informing you that you are now activated on the M-Shwari service.

How to Get the Loan

From ‘M-Shwari’ menu select ‘LOAN’ THEN Select ‘Request Loan’ THEN Enter Amount Enter PIN THEN Confirm the message displayed for example “request loan Kshs 2000” THEN press OK.

The well be an SMS message sent immediately on confirmation of request for loan. The second SMS message is sent on successful or unsuccessful request.

The minimum amount you can borrow is Ksh.100 and the maximum amount is dependent on your loan amount limit.

Security, Interest and Time Limit

The M-Shwari loan require any SECURITY at all to apply, meaning that this makes it perfect for emergencies and small loans that you want to apply for.

The interest rate of M-Shwari is 7.5%, meaning that if you borrow Ksh 1,000 you will be expected to pay Ksh 1,075 at the end of the month.

Advantages and Disadvantages

M-Shwari Loans are advantageous mainly because they require absolutely no security short of having an Mpesa account. This means that if you need around Ksh 1,000-5,000 you can easily access it within minutes of making your request. The interest rates are also small in comparison to the ease of access to the money and lack of security.

However, there are several demerits. First, is the non-negotiable 30 day payment period with the threat of being blacklisted hanging over you, this means that regardless of the amount of money you borrow, you will still be expected to payback within 30 days. The second issue is the interest rate when you try to borrow large amounts; an interest rate of 7.5% p.m is too high. For example, if you borrowed Ksh 50,000 you would have to payback Ksh 87,500 at the end of 30 days making it impractical for borrowing large amounts of cash. Finally, there is no true objective way of determining of affecting your loan eligibility and loan limit; apparently, it is dependent on previous loan repayment behaviour and usage of other Safaricom services such as Voice, DATA and M-PESA.

Recommendations

This loan is recommended only for urgent small loans borrowing. If you want to borrow larger amounts there are other institutions that are better suited to allow you get more money at  better interest rates and longer repayment periods.  

References 

http://www.safaricom.co.ke/personal/m-pesa/do-more-with-m-pesa/m-shwari