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 seeks to regulate digital lenders providers, has become effective beginning today following the signing of the bill into law by President Uhuru Kenyatta earlier this month.

The law now gives the Central Bank powers to license and oversee the previously unregulated digital credit providers who have been accused of charging very high interest rates and harassment of defaulters.

“With the recent advances in technology and ongoing innovations, lending through digital channels, particularly mobile phones, has grown significantly in Kenya. However, concerns have been raised by the public about the predatory practices of the unregulated digital credit providers, and in particular, their high cost, unethical debt collection practices, and the abuse of personal information.” CBK said in a statement sent to newsrooms.

The CBK is currently receiving public comments on the draft Regulations which are expected to be published by March 23, 2022.

“The Regulations provide for inter alia 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.” says CBK.

Over the last few years, there has been the proliferation of unsecured lending to borrowers with tens of unregulated digital microlenders invading Kenya’s credit market.

The new law explicitly grants Central Bank the powers to determine pricing parameters. This will ensure that CBK does not necessarily set the lending rate but rather provide parameters within which digital credit providers shall set their cost of credit.


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