The Business Laws (Amendment) Bill, 2024 (the Bill) was tabled in the National Assembly of Kenya on 1 November 2024. The Bill seeks to amend various laws in Kenya which would affect the financial services sector as well as the manufacturing sector in Kenya. Our analysis of the key provisions of the Bill are as follows:
Law | Current Position | Proposed Change | Potential Impact |
|---|---|---|---|
Banking Act | Limitation of regulatory non-compliance penalties to a maximum of KES 20,000,000 for institutions or credit reference bureaus and KES 1,000,000 for individuals. | Regulatory non-compliance penalty to be the higher of KES 20,000,000 or 3 times the monetary benefit (or loss avoided) for institutions or credit reference bureaus, a cap of KES 3,000,000 for corporate entities and KES 1,000,000 for individuals. | The Bill provides for more punitive measures for licensed entities and brings into focus non-licensed corporate entities which flout banking sector regulations. |
Banking Act | Minimum core capital for banks and mortgage finance companies at KES 1,000,000,000. | Phased increase of the minimum core capital for banks and mortgage finance companies to KES 10,000,000,000 with the following compliance dates and milestones: 31 December 2025- KES 3,000,000,000. 31 December 2026- KES 6,000,000,000. 31 December 2027- KES 10,000,000,000. | The increase of core capital for banks and mortgage finance companies tenfold over a period of 3 years will see increased M&A activity and consolidation between banks in Kenya. Additionally, this activity may set precedent for the merger control regulatory environment in Kenya by the Competition Authority of Kenya. This increase in core capital could see the exit of banks which do not have additional appetite to expand in the Kenyan market by offloading their positions banks with stronger positions in the market. |
Central Bank Act and Microfinance Act. | Regulation of digital credit and digital credit providers as any person who provides credit facilities through the internet, mobile devices, computer devices and other digital systems. | Roping in all persons providing credit and credit guarantee services by introducing definitions of ‘non-deposit taking credit business’, ‘by now pay later’ arrangements, ‘peer to peer lending’ (which includes crowdfunding) and providing provisions for licensing of the relevant service providers. | Historically, non-bank credit in Kenya has been provided on a purely contractual basis without the regulation of the Central Bank of Kenya until recently, digital credit providers were required to be licensed. Should the Bill pass, all credit business will be under the regulatory ambit of the Central Bank of Kenya which would likely provide a predictable environment for borrowers and more stringent regulation for lenders as well as potentially mitigate the predatory nature of some of the players in the non-bank credit sector. |
Parting Remarks The Bill seeks to increase regulatory scrutiny for players in various sectors who will be required to make adjustments to the business processes over the near term. The Bill underwent its first reading on 13 November 2024 and has 2 more readings in the National Assembly prior to being presented to the President for assent and subsequent enactment.
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