Faraja Loan: Zero-Interest Ksh100k Lipa Na M-Pesa Credit Guide (2025)

Kenya’s digital lending space has a new disruptor—the Faraja Loan, a Ksh100,000 interest-free credit facility approved by the Central Bank of Kenya (CBK) and powered by Safaricom’s Lipa Na M-Pesa platform. Launched in partnership with EDOMx Ltd and Equity Bank, Faraja allows shoppers to buy goods instantly and pay later within 30 days without interest.

This guide covers how Faraja works, its benefits, repayment terms, and how it compares to alternatives like Fuliza and M-Shwari.

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How the Faraja Loan Works

1. Zero-Interest Credit for Purchases

Faraja is a Buy Now, Pay Later (BNPL) service that lets customers purchase goods (worth Ksh20–Ksh100,000) from partnered merchants and repay the full amount interest-free within 30 days. Unlike Fuliza, funds cannot be withdrawn as cash or sent to others—they’re strictly for Lipa Na M-Pesa transactions at approved stores like Naivas, Goodlife Pharmacy, and City Walk.

2. Business Model: Discounts Over Interest

• EDOMx earns revenue by negotiating 7–10% discounts with partner stores. For example, if a customer buys a Ksh10,000 microwave, the store receives Ksh9,000 (assuming a 10% discount), while the buyer repays the full Ksh10,000 later.
• Safaricom profits from Lipa Na M-Pesa transaction fees (max 0.5% per transaction, capped at Ksh200).
• Equity Bank provides the capital to pay merchants upfront.

3. Eligibility & Registration

To qualify:

• Be an active Safaricom subscriber (with a minimum of 6 months’ service preferred).
• Have a valid ID and decent M-Pesa transaction history.
• *Dial 799# or use the M-Pesa Super App to opt in and check your credit limit.

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Key Features & Benefits

✅ No Interest: Repay the exact amount borrowed within 30 days.
✅ Instant Merchant Payouts: Stores receive payment immediately, reducing default risks.
✅ Wide Merchant Network: Accepted at Naivas, Goodlife Pharmacies, and more.
✅ No Collateral: Accessible without security requirements.

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Repayment & Default Consequences

• Repayment Period: 30 days (no extensions).
• How to Repay: Dial *799#, select “Lipa Loan,” and repay via M-Pesa.
• Default Penalties:
  • Account suspension or closure by Safaricom.
  • Debt collectors may pursue repayment at the borrower’s cost.

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Faraja vs. Other Loans (Fuliza, M-Shwari)

Feature	Faraja Loan	Fuliza	M-Shwari
Interest	0% (30 days)	High daily interest	Interest applies
Usage	Lipa Na M-Pesa only	Cash withdrawals	Cash withdrawals
Max Limit	Ksh100,000	Varies by user	Varies by user
Repayment	30 days	Auto-deduct on top-up	30 days + interest

Faraja is ideal for planned purchases, while Fuliza/M-Shwari suits emergency cash needs.

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Conclusion

The Faraja Loan is a game-changer for Kenyan consumers, offering interest-free credit for retail purchases via Lipa Na M-Pesa. While its 30-day repayment and merchant restrictions limit flexibility, it’s a cost-effective alternative to high-interest digital loans.

For businesses, Faraja boosts sales by enabling customers to buy now, pay later—a win-win for Kenya’s digital economy.

Have you tried Faraja? Share your experience in the comments!