Digital lenders have been in business for an extended period, but their operations have since been halted by the Central Bank of Kenya and new laws following years of harassment of customers.

These companies, which found a thriving business environment in Kenya, at least during the earlier periods due to lack of proper laws, often employed highly aggressive and ruthless loan collection practices to recover unpaid loans. The methods were in the form of constant and harassing phone calls and text messages, and even blatant personal data abuses where loan collectors would call random people in a borrower’s contacts in an attempt to shame them into paying.


Kenyans have been experiencing financial difficulties, and based on current trends, it seems that their economic issues will not be ending soon. The traditional way to access funds has always been through loans, and digital lenders have filled that gap. However, borrowers may not be aware that they are essentially selling their souls to these companies, which have in the past been proven to have criminal business practices, to say the least.

Kenyans or borrowers also hardly read the term and conditions of digital loan products.

Borrowers should be aware that these practices can have severe financial and personal consequences and it is important for them to understand the terms and conditions of their loan agreement before opting in.

Furthermore, and as said, borrowers should also be aware that these lenders may not have their best interest in mind and can take advantage of them with hidden fees and charges.

This is where the new law comes in…


It is for these reasons that the state, alongside the CBK chose to implement laws that sought to protect Kenyan borrowers from the predatory habits of digital lenders.

For instance, the CBK Amendment Bill was signed into law in 2021.


The law indicates that it is illegal for anyone to operate or offer digital credit services in Kenya without obtaining a proper license as outlined in the amendment. Any individual found to be in violation of this regulation will be punished with a fine of 500,000 shillings, a jail term of 2 years, or both. Additionally, any person who was providing digital credit services before the regulations came into effect must apply for a license within 6 months of the regulations being published by the Central Bank of Kenya (CBK).


A digital lender must establish appropriate policies, procedures, and systems to maintain the confidentiality of customer information and transactions. They are not allowed to share customer information with any third party without obtaining the customer’s permission. Directors, officers, employees, and agents of the digital lender must also protect the confidentiality of customer information and transactions. No one working for the lender is permitted to reveal or use any confidential information, copyrighted material, or any correspondence, accounts of the lender or its customers, during, after or upon termination of their employment or engagement with the lender, except in the proper course of their duties and with written consent of the lender.

Customer consent

A digital lender must obtain consent from the customer before submitting or sharing credit information with a credit reference bureau. The customer may give consent through verbal, written, or electronic means, but the lender must be satisfied that the electronic consent is authentic. The lender is also required to notify the customer in writing or through electronic means, at least 30 days before submitting any negative information to the bureau, or within a shorter period as per the contract between the lender and the customer. Also, the lender must inform the customer within 30 days from the date the information was submitted to the bureau that their credit information has been forwarded to the bureau.

Credit collection

As said above, many Kenyans have complained about being harassed by debt collectors, some of whom have gone as far as insulting them or calling members of their families in an effort to shame them for not repaying loans in a timely manner. To address this issue, the Central Bank of Kenya (CBK) states that digital lenders and their employees or agents are prohibited from engaging in any of the following conduct during the debt collection process:

  • Using threats, violence, or other criminal means to physically harm the person, their reputation or property
  • Using obscene or profane language
  • Making unauthorized or unsolicited calls or messages to a customer’s contacts
  • Using improper or unconscionable debt collection tactics, methods or conduct
  • Any other conduct that has the consequence of harassing, oppressing, or abusing any person in connection with the collection of a debt.

And lastly…

Place of business

According to the bill, online lenders must have at least one physical office. Additionally, any digital lender is not allowed to open, relocate or close any branch or place of business without obtaining prior written approval from the Central Bank of Kenya.


In September 2022, the CBK announced that it has only granted licenses to 10 digital lending companies to operate in the country (including the likes of Ceres, Jijenge, and Rewot – although key names were also missing from the initial list such as Tala and Zenka). Additionally, it stated that it received a total of 288 applications and is still reviewing the ones that were not approved.  This suggested that the number of companies approved could potentially increase and many of the applicants may not be granted licenses.

Those who had not been approved by the CBK had their businesses frozen.

More of that in a second…

Repairing customer credit

At the beginning of the new Kenyan administration, President Ruto said that he planned to remove people who have been listed by the Credit Reference Bureau (CRB) for defaulting on their loans from the Bureau’s records. This would provide them with the opportunity to access other credit options and develop a plan to repay their loans.

This was followed by the reveal of the Credit Repair Framework. The CBK said that the new framework will enhance the creditworthiness of mobile phone digital borrowers whose loans are in arrears and have been reported to the CRB and other similar organizations. However, this framework is not a long-term solution, it will expire on May 31, 2023.

Lenders do not have licenses yet

According to Business Daily, loan apps are expressing frustration over the delays in obtaining operational licenses from the CBK, as well as being blocked from Google Play, and not receiving funding from investors for lending.

An estimated 278 digital credit providers (DCPs) are still awaiting approval from the CBK after submitting applications last year, hindering their operations in Kenya.

However, this could be due to the fact that they have not met the criteria for licensing as stated in the CBK Amendment Bill, 2021, whose clauses are thorough and could pose a challenge for some loan apps whose business model involves exploiting personal data of their customers for profit.

One of the digital lenders expressed concern over the prolonged process, stating that they believe the Central Bank of Kenya may be facing capacity issues and struggling to handle the large number of applications received.

These digital lending platforms, which raise large amounts of money for lending to Kenyans in need of cash, are finding it difficult to secure funding from investors who are hesitant to release funds until the companies receive certification from the Central Bank of Kenya. Executives from multiple firms that are waiting for CBK clearance have stated that if the delays continue, they may face a shortage of cash.