The Central Bank of Kenya (CBK) has significantly expanded its digital lending landscape by granting licenses to 19 new digital credit providers (DCPs), bringing the total to 51 licensed firms.
This announcement marks the latest effort by the CBK to regulate the burgeoning fintech sector, amid a broader move to address concerns over high credit costs and predatory lending practices.
The CBK reported receiving 480 applications from companies aiming to comply with the CBK Act’s licensing requirements, underscoring the high level of interest and activity in Kenya’s digital lending space.
The newly licensed companies, including notable names such as Autocheck, Azura, and Lipa Later, have also met regulatory requirements with other authorities, ensuring adherence to Kenya’s stringent digital lending regulations.
This development follows a mandatory licensing requirement set by the CBK in 2022, aimed at curbing customer exploitation and enforcing fair lending practices. The requirement came in response to rising concerns over privacy breaches and exorbitant interest rates charged by some digital lenders.
With this fourth round of licensing, the CBK continues to demonstrate its commitment to consumer protection and the establishment of a competitive yet regulated digital credit market. The move is expected to foster greater competition, thereby potentially reducing credit costs for Kenyan consumers.
Further, the CBK’s ongoing collaboration with other regulatory bodies emphasizes a comprehensive approach to overseeing the digital lending ecosystem, focusing on business models, consumer protection, and governance standards.
The licensing process is ongoing, with many applicants in various stages of compliance. The CBK encourages these entities to expedite their documentation submission to facilitate the review process. This initiative indicates a future with more licensed digital credit providers, aiming for a more inclusive and regulated financial sector in Kenya.