Dubbed Pesa na Pesa, the product is the brainchild of private lending company AVL Capital (AVLC) and will offer facilities for amounts up to Sh10,000 with interest rates between seven and 10 percent.
Though Pesa na Pesa is not network specific, one must be subscribed to a mobile money transfer platform to benefit from the service.
AVLC Group Managing Director Andrew Kanyutu said the service seeks to be more inclusive by giving borrowers several collateral options.
“Shares listed on the NSE can be an asset to access the money you need. Guarantees from Chamas or savings from Saccos can be a security. For salaried people we are going to be working with guarantees from their employer. However we are still going to be background checking,” he said.
Other options include a verifiable repayment history from a recognised lending institution or regular cash flow from ones business.
Once registered a member can borrow by sending an SMS to 3105 indicating the amount and can withdraw money from an authorised agent within an hour of approval.
The facility has a seven day repayment period, although early payments are accepted at no extra charge.
“We try to establish a better customer relationship so if someone is unable to pay we can find out why and try to restructure with the borrower,” Kanyutu explained.
For now prospect members can register with AVLC by contacting the company, as it finalises physical registration locations.
“Chase has the platform for bulk payments so we’ve partnered with them because it requires a lot of heavy capital investment. The money is still ours but we are riding on their systems,” Kanyutu said.
AVLC draws its funds from private equity and is looking to work with other financial institutions to source more capital for lending.
The company plans to roll out the service to all East African countries by the fourth quarter of this year.
Earlier this month Airtel Kenya launched its mobile phone money transfer service for its subscribers to get loans ranging from Sh100 to Sh10,000 through the Faulu Kenya.