Safaricom has announced a new policy regarding the deduction of Excise Duty Tax on all M-Shwari Loans before disbursement.
In a message sent to users on Monday, February 12, Safaricom informed its customers that the deduction would commence on February 20, 2024.
“Dear customer, we wish to notify you that starting 20th February 2024, the Excise Duty tax due on M-Shwari loan facility fees will be deducted from your loan amount at disbursement,” the message read.
These changes are expected to have an impact on how M-Shwari customers engage with the service, which is offered by Safaricom in collaboration with NCBA Bank.
M-Shwari has grown to become one of the leading digital lenders in Kenya since its launch in November 2012. The service provides loans ranging from Sh100 to Sh50,000, and in some cases, up to Sh1 million.
These loans attract an interest of 9% per annum, where 7.5% is the loan fee while the remaining 1.5% is the excise duty.
The new policy will see the 1.5% excise duty deducted directly from the loan disbursement amount. This means that customers will receive their loan amount minus the excise duty. For instance, if a customer borrows Sh1,000, they will receive Sh985 in their M-Pesa account, with Sh15 being deducted as excise duty.
This change is likely to affect the borrowing behavior of M-Shwari customers. Since the excise duty is deducted upfront, customers will have to factor this into their borrowing decisions. Customers need to understand this change and plan their finances accordingly.
This move by M-Shwari is a step towards greater transparency in the way it charges for its loans. By deducting the excise duty upfront, customers can see the cost of borrowing. This can help customers make more informed decisions about their borrowing needs.
