Fuliza lawsuit: Are Kenyan mobile lenders protecting consumers or exploiting their vulnerability?

The Mt Kenya Times

Business
9 November 2026

The Mt Kenya Times

A High Court representative case involving 9.1 million subscribers puts Safaricom’s overdraft service under judicial scrutiny — and raises hard questions about transparency in Kenya’s digital lending boom.

By Collins Kibet

Kenya’s digital financial services sector has transformed how millions of citizens access money, make payments and manage financial emergencies. Through mobile lending platforms, Kenyans can borrow within seconds without visiting a bank, completing paperwork or providing collateral. Beneath this convenience, however, lies an increasingly urgent question: are digital lending services genuinely empowering ordinary citizens, or are they trapping financially vulnerable households in a cycle of debt? A lawsuit involving Safaricom’s Fuliza overdraft service has brought that debate sharply back into the national spotlight.

The High Court’s Commercial and Tax Division yesterday allowed Paul Gakungu Mihango to pursue a representative case against Safaricom over the disclosure of interest and fees charged through Fuliza. The dispute could affect approximately 9.1 million current and former subscribers, based on figures presented by Safaricom during proceedings. The development is significant because it moves the conversation beyond individual customer complaints and places the transparency of mobile lending services under direct judicial scrutiny.

At the centre of the dispute is whether customers receive sufficient information about the actual cost of borrowing. Mihango reportedly approached a Safaricom shop in February 2025 seeking a comprehensive breakdown of charges incurred through Fuliza. His lawyer subsequently argued that the information provided was inadequate. The question his case raises is fundamental to consumer protection: how can ordinary Kenyans make informed financial decisions when they may not fully understand the charges attached to their borrowing?

Safaricom has defended its disclosure practices, maintaining that customers receive information through mini-statements, SMS notifications whenever Fuliza is used and entries reflected in their M-PESA statements. The disagreement, however, highlights an important distinction — the difference between making information available and ensuring customers can actually understand it. A transaction notification may confirm that a fee has been deducted, but consumers may still need a clear explanation of the amount borrowed, applicable charges, outstanding balances and the total sum payable. The court must consider whether existing disclosure practices satisfy the relevant legal and contractual obligations.

Fuliza operates as an overdraft facility allowing eligible M-PESA customers to complete transactions even when their mobile money balance is insufficient. The service runs through a partnership involving Safaricom, KCB Bank Kenya, NCBA Bank Kenya and Sidian Bank, according to terms updated in July 2026. This arrangement demonstrates how telecommunications companies and financial institutions have combined services to expand access to credit. That expansion, however, creates a corresponding responsibility to ensure customers understand what they are signing up for.

Borrowing through Fuliza is not without cost. Published terms provide for applicable interest and administrative fees depending on the outstanding amount and repayment period, including a daily administrative fee capped at KSh30 for each day an overdraft remains unpaid. For households already stretched by food prices, transport, rent and school fees, even modest charges accumulate quickly. Repeated borrowing and delayed repayment can compound financial obligations in ways that customers may not fully anticipate at the moment they accept credit.

The growing dependence on mobile credit also reflects deeper economic conditions. Many Kenyans turn to Fuliza when they face unexpected shortfalls or run dry before their next income arrives. Small traders use it to complete transactions. Workers borrow to cover transport. Low-income earners reach for it to buy essentials. In such circumstances, digital credit offers immediate relief. When borrowing becomes a routine response to insufficient income rather than an occasional emergency measure, however, consumers risk entering a cycle in which incoming money is immediately absorbed by existing debt.

This should not be read as evidence of financial irresponsibility. It reflects the difficult economic realities facing millions of Kenyan households. Unemployment, irregular earnings, rising living costs and limited access to affordable formal credit have made readily available mobile loans appealing for people with few alternatives. A person on an unstable income has little opportunity to build savings or maintain an emergency fund. The challenge is therefore not whether mobile lending should exist, but whether it is being offered responsibly and transparently.

The lawsuit raises broader questions about consumer protection in Kenya’s expanding digital economy. Article 46 of the Constitution guarantees consumers the right to information necessary to gain full benefit from goods and services, as well as protection of their economic interests. These principles are particularly important in financial services, where borrowing decisions are made on the basis of information provided by lenders. Transparency is not an additional benefit — it is a fundamental obligation in any consumer-facing credit arrangement.

The court has directed Mihango to publish a notice in an English-language national daily to inform eligible subscribers about the proceedings. A draft notice is expected to be submitted for court approval, after which subscribers will have 30 days from publication to apply to join the case. Permission to pursue a representative lawsuit does not mean Safaricom has been found liable. The central allegations remain subject to judicial determination, and the company retains its full opportunity to defend its practices.

The proceedings could nonetheless establish an important precedent for Kenya’s digital financial services industry. Other mobile lending platforms and financial institutions should recognise that technological convenience cannot substitute for accountability. Customers must understand borrowing charges before accepting credit, receive accurate transaction records and have accessible channels through which they can query disputed deductions. Regulators must strengthen oversight to ensure compliance with consumer protection requirements without discouraging responsible innovation.

Safaricom and its banking partners should consider how borrowing information is presented. Clear statements showing original amounts borrowed, applicable fees, accumulated charges, repayments made and outstanding balances would strengthen consumer confidence and reduce disputes. Financial literacy programmes must also be expanded to help citizens understand digital credit, repayment obligations and the real consequences of borrowing beyond their means.

Mobile lending has transformed Kenya’s financial landscape. Its long-term success, however, depends entirely on public trust. Kenyans deserve convenient financial products without uncertainty about what those products actually cost. As the court examines the Fuliza dispute, one question sits at the heart of proceedings: should millions of consumers simply trust digital lending platforms, or should those platforms be required to prove they deserve that trust?

In a country where financial inclusion is a national priority, the answer should not be difficult.