A facility initially launched as a test project for Airtel Africa’s financial technology (Fintech) division now lends an average of Shs970 million daily, reflecting Ugandans’ growing appetite for small loans.
According to a report by Airtel Africa, the parent company of Airtel Mobile Commerce, more than 866,000 loans are taken up by 254,000 customers in Uganda each month, underscoring the high demand for microcredit.
“Our quick loan product is designed to help customers make payments when and where they want to, reducing the number of failed transactions,” the report states.
The loan product, a collaboration between Airtel Money and Housing Finance Bank, allows customers to complete transactions even when their account balance is insufficient. Customers can take out multiple short-term loans up to their credit limit, each with a 15-day repayment deadline. This product was introduced after Airtel noticed an increase in failed transactions due to insufficient balances.
Airtel Money, which also offers other microloan products, remains highly profitable. It generated Shs737.1 billion in revenue for the year ending in 2023, with a profit of Shs249.9 billion, up from Shs218.6 billion in 2022.
Mobile money micro-lending has been growing, providing many Ugandans access to short-term loans with repayment periods ranging from a week to 30 days.
The Airtel Africa report indicates that the demand for its quick loan product in Uganda had reached $7.9 million (Shs29.1 billion) per month by March 2023, driven by customers such as micro-traders and shoppers who require immediate liquidity for their daily transactions.
The application process involves a 2 percent facility fee and a daily interest rate of 1 percent for each unpaid day over a 15-day period. However, a 3 percent late payment fee is applied if the loan is not repaid within 30 days, and a 3 percent overdue fee on the outstanding balance is imposed if repayment is not made within 37 days.
This surge in micro-lending highlights Ugandans’ reliance on small loans to manage their finances and sustain their livelihoods.
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