TECHDIGEST – Following the expiration of the 3-day ultimatum by the Central Bank of Kenya (CBK), 10 digital lenders in Kenya have now been officially licensed to operate in the country. The 10 emerged from a pool of 288 applicants who were directed to submit all required documents to aid the CBK’s licensing review process. Other digital lenders that missed the application deadline have been directed to cease their operations immediately.

Earlier in March, Kenya’s apex bank announced a new set of regulations to guide the licensing and oversight of digital lending providers (DCPs) in the country.

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Two months later, the CBK issued an official reminder to these lenders, urging them to apply for licensing as that would determine their continued eligibility in the country.

Today, two days since the ultimatum’s deadline elapsed, CBK announced that 10 digital lending companies have received their operating licenses. These are CeresTech Limited, Getcash Capital Limited, Giando Africa Limited (trading as Flash Credit Africa), Jijenge Credit Limited, Kweli Smart Solutions Limited, Mwanzo Credit Limited, MyWagepay Limited, Rewot Ciro Limited, Sevi Innovation Limited and Sokohela Limited. 

Following the release of the list, Tala, a popular digital lender in Kenya with millions of users, issued a press release calming its customers that it was still in business and is currently in the process of obtaining its license.

Kenya gives digital lenders a 3-day ultimatum to comply with new regulations

One of the provisions of the new regulations is 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.

A noteworthy feature of the new regulations is that they protect Kenyans from the threats, profane language, violence and other abusive practices widely used in debt collection.

However, contrary to previous speculations, the new regulations do not enforce a cap on interest rates, except for loans classified as non-performing. 

With this move, the CBK is doing for Kenya what most data protection bodies—like Nigeria’s NITDA— are struggling to do in other African countries.

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TECHDIGEST – The Central Bank of Kenya (CBK) says that leading African Fintech firms, Flutterwave Payment Technology Limited and Chipper Cash, are not licensed to operate remittances or payment services in the East African country.

Flutterwave and some other Fintech companies have been subject of intense scrutiny by the Kenyan government over the past few months with their operations being affected.

This was made known on Thursday by the Governor of CBK, Patrick Njoroge, at a press conference following a meeting of the Kenyan apex bank’s Monetary Policy Committee in Nairobi.

Njoroge, who singled out Flutterwave and Chipper Cash for not having operator permit during the virtual press briefing, said, “Flutterwave is not licenced to operate as a remittance provider or payments service provider in Kenya. They are not licenced to operate and therefore, they should not be operating and I think Chipper Cash, we could also say the same.’’

Recall that about 3 weeks ago, a Kenyan High Court had seized Sh7 Billion ($59 million), from 56 accounts belonging to Flutterwave and some other Fintech companies over allegations that they were being used as conduits for money laundering in the guise of providing merchant services.

Kenya’s Asset Recovery Agency (ARA) had informed the court that the company’s account received billions of shillings and the same was deposited in different bank accounts in an attempt to conceal the nature, source or movement of the funds.

However, in its reaction, Flutterwave Kenya, dismissed the claims, denying involvement in any financial improprieties in the guise of providing merchant service as contained in recent reports, saying that it earns its fees through a transaction charge, records of which are available and can be verified.

The Kenyan court still granted the order freezing three Flutterwave accounts with funds amounting to about $43 million in various currencies.

African cross-border fintech startup, Chipper Cash is a financial services company that features a software application platform that enables free instant cross-border mobile money transfers in Africa as easy as sending a text message. The company was founded in 2017 and is headquartered in San Francisco, California.

Kenya, which is a pioneer in mobile money with M-Pesa, has been mulling the idea of launching a Central Bank Digital Currency in the country, which is considered a major market in the African continent for mobile payments and remittances.

Source: Nairametric

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