The Central Bank of Kenya Act, No. 10 of 2021 is Kenya’s most recent attempt to regulate digital credit service providers. The Act requires the licensing of digital borrowing platforms in Kenya by the Central Bank of Kenya (CBK).

Previous attempts to regulate digital lending in Kenya were made last year. These primarily focused on the regulation of financial products and services including digital credit services and the regulation of digital mobile lenders who offer credit facilities in the form of mobile money lending applications.

The Act covers the objectives of the previous bills and further defines the specific terms “digital channels,” “digital credit,” “digital credit business” and “digital credit providers.” This effectively gives the CBK a wider net of powers to regulate the growing digital lending sector.

The amendment gives a grace period of six months from the time that it will come into force for existing digital money lenders to register with the CBK.

The Act empowers the CBK to make additional regulations to give effect to the provisions including registration requirements, capital adequacy requirements, license fees, permissible and prohibited activities and reporting requirements. It anticipates that the regulations will be made within three months of the coming into force of the Bill.

The Act gives the CBK very wide powers and legislators must be mindful that the regulations should help, not hinder, technological innovation, while protecting consumer rights. The wide powers granted to the CBK under the Act must be judiciously exercised to avoid any unintended consequences of stifling growth of businesses and access to credit.


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