Safaricom, inventor of M-PESA, which is 40 per cent owned by Vodafone, has joined with CBA, Kenyas largest private bank, to enable its users in the country to save, earn interest and borrow using mobile phones.

M-Shwari will make it possible for people to save as little as 1 Kenyan Shilling (Ksh), equivalent to £0.007, and to earn interest on savings of up to 5 per cent per year. Customers will be able to borrow amounts from as little as Ksh 100 (£0.73). The more they save the more phone credit they can get.

12m unbanked Kenyans have been identified by the Central Bank of Kenya and the Kenya Bureau of Statistics. An estimated Ksh 300bn (£2.8bn) should be brought into the formal banking environment under the M-Shwari scheme.

“It is simple. There are no ledger fees, no limits on the frequency of withdrawals, no minimum operating balance and no charges on deposits for M-PESA to M-Shwari Account. You do not need to go to a branch and fill in application forms. Just one click on your phone and you will have a bank account at no cost,” said Safaricom CEO, Bob Collymore, at the launch.

“M-Shwari is a groundbreaking financial service innovation that will foster a culture of saving and allow Kenyans with no collateral to access micro-saving and loans products through the convenience of their mobile phones at very competitive terms.”

Safaricoms partnership with CBA is evidence of the mutual benefit derived from partnerships between the telecommunications industry and the banking sector. Safaricom already has relationships with 140 commercial banks to support its M-PESA payment ecosystem. The company says that M-PESA is already used to transact Ksh 80bn (£581m) per month.