The Central Bank of Kenya (Amendment) Bill, No. 10 of 2021 (the 2021 Bill) is Parliament’s most recent attempt to regulate digital credit service providers. If passed into law, the 2021 Bill will require the licencing 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 focussed on the regulation of financial products and services including digital credit services (see the overview here ) and the regulation of digital mobile lenders who offer credit facilities in the form of mobile money lending applications (see the overview here).
The 2021 Bill attempts to cover 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 2021 Bill proposes 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 proposed legislation empowers the CBK to make additional regulations to give effect to the provisions in the Bill, including registration requirements, capital adequacy requirements, licence 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 2021 Bill 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 2021 Bill must be judiciously exercised to avoid any unintended consequences of stifling growth of businesses and access to credit. Legislators should also consider consolidating the 2021 Bill with the previous bills introduced to Parliament last year (noted above), given that the objectives of the three bills are the same.
