The Co-operative Bank of Kenya has introduced a new unsecured digital overdraft facility called “Kamilisha”, positioning itself to compete closely with Equity Bank Kenya’s “Boostika” and Safaricom’s “Fuliza” services.
According to the bank, the new product allows individuals and businesses to complete transactions even when their account balance is insufficient. The overdraft limit is up to KSh 100,000, enabling payment of bills, transfers, or purchases despite a shortfall.
The cost structure for Kamilisha includes a one-time access fee of 2% on the borrowed amount, a daily maintenance fee of 0.2% on the outstanding balance, and a monthly credit-life insurance premium of 0.034%.
The access cost is further subject to a 20% excise tax. For example, a customer overdrawing KSh 1,000 could incur approximately KSh 84.34 in charges if the full amount is outstanding for a month, corresponding to an effective cost of credit of about 8.43% per month.
The bank’s move is seen as strategically timed: the digital credit market in Kenya has been rapidly expanding, with services like Fuliza and Boostika gaining wide adoption.
By launching Kamilisha, Co-operative Bank aims to tap into the gap where customers need short-term, flexible overdraft support and diversify its product offerings.
Analysts suggest that while competition will benefit consumers by offering more choices, users must be cautious of the cost implications of such short-term credit facilities, which can mount up quickly if balances roll over.
The launch also raises questions about responsible lending and the financial inclusion agenda in the Kenyan banking sector.
