The Central Bank of Kenya (CBK) has officially licenced an additional 10 digital lenders to operate in the country, bringing the total number of authorised digital credit providers (DCP) to 32. In line with Section 59(2) of the Central Bank of Kenya Act (CBK Act), the apex bank began the supervision of the digital lending space last year, establishing a transparent licencing process that will see to a saner digital lending space in Kenya.
Following the expiration of the 3-day ultimatum by the CBK, 10 digital lenders—from a pool of 288—were initially licensed to operate in Kenya last year. Then in January, an additional 12 were listed. CBK’s today announcement brings the total number of licenced credit providers to 32, from a combined pool of over 400 applications,
The complete list of licenced digital lenders includes big names like Tala, MFS Africa, M-Kopa Loan, and Jumo. “Other applicants are at different stages in the 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 the CBK reads.
For users of the licenced companies, one thing is guaranteed: increased confidentiality for borrowers. Digital lenders are now barred from sharing customers’ information with all kinds of third parties—including credit reference bureaus—without prior consent from the customer. They are also expected to operate at least one physical office in the country.
According to the CBK, the move to licence and oversee DCPs was necessitated by mounting complaints by Kenyans about the prevalent adoption of unethical loan recovery tactics. The bank seeks to make problems like high interest rates, abuse of personal information, and debt-shaming tactics a thing of the past.
In a Semafor report last month, Alexander Onukwe discussed Google’s continuous role in regulating the digital lending space in Africa. Since December 2022, the technology behemoth has stopped hosting DCPs that failed to provide proof of licencing from Kenya CBK or Nigeria’s Federal Competition and Consumer Protection Commission (FCCPC). While this move may be stifling to hundreds of lending operators, it has granted more credibility to the regulators of Africa’s largest microlending markets.
Now, the much-coveted CBK license is in the hands of 32 digital lenders, a relatively small fraction of the total operators in the space. There are arguments that the CBK is moving at a rather slow pace, but according to the bank, this delay is largely caused by applicants who fail to submit the required documents expeditiously.