January 25, 2022 In Thought Leadership

Enactment Of Kenyan Law to Regulate Digital Lenders

On 7th December 2021, President Uhuru Kenya signed into law the Central Bank of Kenya (Amendment) Act, 2021 (the Act) that affects digital lenders. The Act provides the Central Bank of Kenya (CBK) with the powers to license and oversee digital credit providers.

The Act brings about CBK regulation of digital lenders and consumers. Pursuant to the Act, the CBK shall make additional regulations to give effect to the provisions in the Act, including but not limited to:

  1. registration and licensing of digital credit providers;
  2. capital adequacy requirements;
  3. minimum liquidity requirements;
  4. permissible and prohibited activities;
  5. licence fees; and
  6. reporting requirements of digital credit providers.

The Act also requires registration of existing digital lenders within six (6) months of the date of the Act.

The Act also brings about penalties for non-compliance. Any person engaging in digital credit business without a license may be liable to imprisonment for a term not exceeding three (3) years or a fine not exceeding KES 5,000,000 or to both.

In accordance with the provisions of the Act, CBK published draft regulations known as the Digital Credit Providers Regulations and invited the public for comments. The draft regulations are available here.

For further information please contact Walid Khan or your relationship partner at Africa Law Partners.