Lipa Later, Autochek Get Greenlight; 400+ Digital Lenders Stuck In Kenya Crackdown

Digital lenders in Kenya are reaching out to the Central Bank of Kenya (CBK) for guidance on necessary documentation to expedite the clearance of over 400 pending license applications.

The Digital Financial Services Association of Kenya (DFSAK), representing digital loan providers, acknowledges the recent issuance of 19 additional licenses but emphasizes the need for clear CBK guidance to accelerate the process.

Since March 2022, CBK has received 480 applications for digital lending licenses, with 51 approvals granted and 429 pending due to “pending documentation” issues. Kenyan buy-now-pay-later startup Lipa Later and Nigerian cars procurement platform Autochek are among notable names in the latest batch of licensees.

DFSAK, addressing challenges faced by digital credit providers (DCPs) entering regulation for the first time, requests CBK to provide guidance notes similar to those issued by the Office of the Data Protection Commissioner in December. Kevin Mutiso, DFSAK’s chairman, emphasizes the importance of proactive measures, reports Business Daily, suggesting that guidance notes would enhance the quality of submissions, streamline the review process, and improve compliance in the sector.

The recent issuance of 19 licenses follows almost a year after the previous batch of 12 and nearly two years since CBK mandated the mandatory registration of DCPs to supervise sector operations.

The latest batch of licensees also include Azura, Chapeo, Chime, Creditarea, Decimal, Dexintec, Factorhouse, Fezotech, Fortune, Lobelitec, Maralal Ledger, Marble Capital, MKM Capital, Pi Capital, Senti Capital, Ubapesa, and Zillions Credit.

The increase in applications from 401 reported last March to the current 480 indicates growing interest in the digital lending space. DFSAK members have adapted to the CBK (Digital Credit Providers) Regulations, 2022, including restrictions on listing defaulters below KES 1 K.

Digital loans have gained popularity for their easy application process, providing quick cash without collateral for borrowers facing emergencies. CBK’s regulation of this space aims to address public concerns about digital loan pricing, unethical debt practices, and the abuse of personal information.

The new regulation dictates that digital lenders must disclose all charges, fees, interest rates, and total credit costs to customers, with CBK clearance required for any rate variations.

Featured Image Credit: Moolah