A few weeks ago, we reported that Safaricom had introduced Faraja, a zero-interest financing option for purchases of goods up to KES 100,000.
However, today, we are learning that The Central Bank of Kenya (CBK) blocked the launch of a Safaricom-backed zero-interest credit service, as first reported by Business Daily.
Safaricom collaborated with Equity Bank and EDOMx to develop Faraja Credit, a 0% interest Buy Now Pay Later (BNPL) program that provides credit for in-store purchases at selected merchant outlets around the country.
Faraja was intended to function similarly to the Lipa Later service already available in the market, except that buyers would walk away with goods from a pre-selected list of merchants without having to pay in advance.
Based on media invites provided to the press, the product was slated to launch on July 6 at 8 p.m., and Safaricom had loaded the terms and conditions of the product that its users would use to shop for goods and pay afterwards, hence our report.
However, according to the Business Daily, a call from the CBK arrived in the afternoon before the product’s introduction, with explicit directions that the product was under regulatory evaluation and pending approval.
This pushed Edomx to cancel the launch, and Safaricom hastily removed the Faraja terms and conditions from its websites.
Before launching a product, the CBK requires regulated enterprises to submit features, customer terms of agreement, fees charged on the product, and proof of efforts to guard against dangers associated with the product.
Other factors include the product’s market viability, tax ramifications, and evidence that it would not violate market statutory or prudential rules.
The CBK also requires enterprises to provide proper complaint resolution methods, maintain the confidentiality of consumer data, and avoid coercive selling and putting the client under excessive pressure.
It is unclear whether the product will be approved and released.