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Kenya's central bank grants 19 digital lenders licenses

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The Central Bank of Kenya (CBK) has licensed a further 19 digital lenders, bringing up the total number of licensed Digital Credit Providers (DCPs) to 51 in the East African country.

The CBK introduced new regulations in October 2021, to crack down on abuse of personal private information, unethical debt collection services and high interest rates provided for credit facilities offered through digital platforms via mobile phones and mobile money accounts.

Many of the loan services run on mobile applications, mobile money or USSD platforms, while convenient, raise concerns over the privacy of user data.

In 2021 DCPs in Kenya were told to re-register and apply for a license. However, by September 2022, only ten digital lenders had been granted licenses.

A further 12 digital lenders were licensed in January 2023 and ten more in March 2023.

The CBK's recent announcement brings the total number of licensed digital lenders to 51, out of hundreds of applications.

"CBK has received 480 applications since March 2022 and has worked closely with the applicants in reviewing their applications. Additionally, CBK has engaged other regulators and agencies pertinent to the licensing process, including the Office of the Data Protection Commissioner (ODPC)," the banking regulator said in a statement.

The CBK has licensed 51 digital lenders out of 480 applications.   (Source: Image by DCStudio on Freepik)
The CBK has licensed 51 digital lenders out of 480 applications.
(Source: Image by DCStudio on Freepik)

"The focus of the engagements has been inter alia on business models, consumer protection and fitness and propriety of proposed shareholders, directors and management," it added.

"This is to ensure adherence to the relevant laws and, importantly, that the interests of customers are safeguarded," it concluded.

Digital lending trends

Kenya's digital lending regulations seek to bring order to the fintech ecosystem.

However, there are still many digital lenders that have not being granted licenses. So much so that in January 2023, some voiced their frustrations that the delay had resulted in their apps being blocked on the Google Play Store.

The complaints came after the ODPC in October 2022 audited at least 40 digital lenders for data breaches against their customers.

Follow Connecting Africa on our new X account @connect__africa to get the latest telecoms and tech news across Africa.

Kenya is, however, not the only African country that is cracking down on unscrupulous digital lenders.

In August 2022, Nigeria's Federal Competition and Consumer Protection Commission (FCCPC) implemented new rules requiring digital lenders to register.

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*Top image source: Image by wirestock on Freepik

Matshepo Sehloho, Associate Editor, Connecting Africa

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