300+ Digital Lenders In Limbo Amid Stringent CBK Process In Kenya

The Central Bank of Kenya (CBK) has today announced the licensing of an additional 10 Digital Credit Providers (DCPs). This brings the number of licensed DCPs in Kenya to 32 following the licensing of a total of 22 digital lenders as of January 2023.

The CBK says it has now received 401 applications since March 2022 and worked with the applicants in reviewing their applications, approving only nearly three dozen digital lenders so far including some better-known names such as MFS Technologies, M-KOPA, Pezesha, and Jumo. Despite some 369 digital loans businesses in limbo, this is vital to efforts to clean up Kenya’s digital lending space, the CBK says, which had become a haven for rogue operators over recent years.

However, there has been some late agitation from a section of yet-to-be-licensed lenders who have decried what they perceive as a slow-paced process that jeopardises their business. Curiously, one of the notable players, Branch, which featured prominently in accelerating digital lending in Kenya remains missing from the licensed list.

At one point, another prominent player, Tala, issued a statement reiterating that it was awaiting approval having applied with the CBK as required. Tala is named in the latest batch of digital lenders that have bagged CBK approval having failed to make the cut in the first two batches. (See full list [PDF]).

Nevertheless, the apex bank says it has engaged other regulators and agencies pertinent to the licensing process, including the Office of the Data Protection Commissioner.

The focus of the engagements has been among other things on business models, consumer protection and fitness and propriety of proposed shareholders, directors, and management. This is to ensure adherence to the relevant laws and that the interests of customers are safeguarded.

It is understood that other applicants are at different stages in the process, mainly awaiting the submission of requisite documentation.

The licensing and oversight of DCPs as indicated was precipitated by concerns raised by the public about the predatory practices of the unregulated DCPs, and in particular, their high cost, unethical debt collection practices, and the abuse of personal information.

Featured Image Credits: Moolah