Kenya is home to more than 200 digital lenders that are providing people with easy access to loans of various amounts. Over the last few months though, the lenders have come under attack from the regulator, the Central Bank of Kenya (CBK) with some being accused of operating in the country without a proper licence.
In March this year, CBK went ahead and published new regulations requiring all digital lenders to get a license within six months or cease their operations by September 2022. Previously, the lenders were only required to register the businesses to run their operations in the country.
With the September 2022 deadline now here with us, CBK has now directed all the lenders who have not complied with the new regulations to close shop.
CBK says it received 288 applications since March 2022 and has worked closely with the applicants over the last six months in reviewing their applications. Additionally, it notes that it has engaged other regulators and agencies pertinent to the licensing process, including the Office of the Data Protection Commissioner. Out of the 288, only 10 have now been licensed as digital lenders. They include Ceres Tech Limited Getcash Capital Limited, Giando Africa Limited, trades as Flash Credit Africa, Jijenge Credit Limited, Kweli Smart Solutions Limited, Mwanzo Credit Limited, MyWagepay Limited, Sevi Innovation Limited, Rewot Civo Limited and Sokohela Limited.
CBK says other applicants are at different stages in this process, largely awaiting the submission of requisite documentation.
‘’We urge these applicants to submit the pending documentation expeditiously to enable completion of the review of their applications. ‘’ a statement from CBK reads.
‘’All other unregulated DCPs that did not apply for licensing must cease and desist from conducting digital credit business.’’ the statement further reads.
The licensing and oversight of the digital lender was precipitated by concerns raised by the public about the predatory practices of the unregulated DCPs, and in particular, their high cost, unethical debt collection practices, and the abuse of personal information.
In 2021, President Kenyatta approved an amendment that gives CBK powers to license and oversee previously unregulated digital money lenders in Kenya. Citing technology advances and ongoing innovation in the sector, the monetary authority recognised the growth of lending through digital channels (particularly via mobile phones) as well as the challenges that have accompanied this growth.