Kenya is among the countries in Africa with the highest number of micro-loan providers. Yet, it seems there is still room for more. Cellulant and Stanbic bank are the latest to join the club. But targeting Kenyan artists, against their royalties from Safaricom.
In Kenya, artists can opt to earn an extra income by having their songs used as ringback tunes. That is through Safaricom's Skiza scheme. Skiza allows Safaricom subscribers to set a song as the tune that callers listen to. The service comes at a daily fee of Ksh 1 ($0.0098).
There are 11 million subscribers using the service with over 132,000 songs available for download.
In August this year, Safaricom reported that they had disbursed Ks 200 million (est. $2,000,000) in Skiza royalties to the over 21,000 artists that are registered.
But, Safaricom deals with the artists through other companies. Called Content Service Providers (CSPs) or Premium Rate Service Providers (PRSPs), they handle this. Currently, the number stands at 11 and it's these that represent artists to Safaricom.
Out of the fee charged to subscribers, Safaricom pays the artists 30% as the royalty. But, the amount is paid through their respective CSPs or PRSPs. Who, in turn, pay the musicians under the contracts they have signed the artists.
"The loan facility will also enable artists to purchase homes, land, construct, purchase cars as well as personal borrowing exclusively from Stanbic Bank. The royalties earned will guarantee the loans through a monthly check-off repayment plan, being managed by Cellulant."
Cellulant is among those 11 CSPs and PRSPs, after launching its ringtone platform in 2004. To date, they count over 5,000 artists signed to it who each earn a monthly royalty.
Yet, Cellulant says that the royalties these artists are earning aren't enough. They "have been seeking alternative means to get direct access to capital for their different project initiatives". Hence the move to start issuing loans against those royalties.
Under the initiative, the 5,000 plus artists will access bank loans from Stanbic. They will be able to secure loans for their various projects. These include "recording, video production, event sponsorships, album production, marketing & advertising".
To qualify, artists should be earning at least Ks 25,000 (est. $250) in monthly royalties. Additionally, they should have a clean Credit Reference Bureau record. There were no details about the amounts of loan amounts and interest rates.
Founded in 2004, Cellulant is among the companies that have raised a significant amount of funding in 2018.