Kenya’s New Law to Regulate Digital Lenders Takes Effect

The Central Bank of Kenya (CBK) has announced that the Central Bank of Kenya (Amendment) Act, 2021, which will allow the CBK to license and supervise digital lenders, has come into effect following the Presidential assent on December 7, 2021.

Recall that Contrivers Buzz earlier reported that digital credit providers (DCP) operating in Kenya would have 6 months from the date the Central Bank of Kenya (Amendment) Bill is signed into law to register with the Central Bank of Kenya(CBK). Well, it looks like June 2022 would have DCPs rushing to catch up with the deadline for license registration, which is different from the previous requirement of only registration with the CBK. 

The Amendment requires the CBK to publish relevant Regulations within three months, and accordingly CBK has announced the issuance of draft Digital Credit Providers Regulations and has invited public comments on the same. The Regulations provide for the licensing, governance, and credit operations of Digital Credit Providers (DCPs), they further provide for consumer protection, credit information sharing, and elaborate on the Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT) obligations of DCPs, amongst other things. 

In a statement by the CBK, “The Amendment provides the Central Bank of Kenya with the powers to license and oversight the previously unregulated digital credit providers,”. New digital DCPs are now required to be licensed before commencing operations while existing digital lenders now have six months to apply for licensing. DCPs will be required to reveal all the information concerning their products, including details on pricing, penalties for defaulters, and the modalities of debt recovery. The CBK has urged all unregulated DCPs to submit their business details by January 21, 2022.


The need to regulate digital lenders stems from the unhealthy practices around shaming borrowers, hidden fees, penalties, etc.

With particular reference to sharing of data with third parties without consent and for purposes not consented to, Kenya’s Data Protection Act expressly prohibits the same. Digital lenders violate customer privacy by sharing data with third parties without obtaining the necessary consent, and in cases where customers defaulted on debt repayments, digital lenders sometimes resorted to incessant reminder texts messages and calls to contacts of defaulters.

It is expected that this development of licensing and oversight supervision of previously unregulated digital credit providers by the CBK will help curb certain unhealthy practices by digital lenders.

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