The Central Bank of Kenya (CBK) has confirmed its plan to issue payment licenses to fintech startups that operate in the country soon.
The move is one that signifies a huge shift from CBK’s previous stance and opens up East Africa’s largest payments market. Among the companies hoping to be granted licenses are Flutterwave and Chipper Cash.
Speaking about this move, CBK’s governor, Kamau Thugge, said that the regulator is working to amend the National Payment Systems Act of 2011. This is aimed at establishing a legal framework that will allow fintech firms to operate legitimately.
Kenya’s financial industry is regulated under the Central Bank of Kenya Act, the National Payment Systems Act alongside the National Payment Systems Regulations of 2014, and the e-money Regulations of 2013. Unfortunately, all these laws have been very unclear about the fintech sector.
This ambiguity has been a leading factor to the conflicts between remittance and payment startups and the Kenyan authorities. Law enforcement agencies such as the Financial Reporting Sector (FRC) and the Asset Recovery Authority (ARA) have previously frozen accounts and seized assets belonging to fintech firms on money laundering charges.
The CBK itself had ordered local financial institutions like banks and mobile money service providers to cut all ties with fintech firms back in 2022. The main reason cited for this order was unspecified threats to the country’s financial systems. According to the regulator, these firms had been operating in the country without authorisation.
This new stance is one that these sector players will hope brings a new legal framework for them as the sector looks to grow even further in Kenya and the region as a whole.
