Kenya’s digital lending space continues to grow with the Central Bank of Kenya (CBK) granting licenses to 10 additional digital credit providers. This brings the total number of micro-lenders to 32, with the latest batch of approvals largely featuring well-known household names in the digital-only lending space, such as Zenka Digital, Okolea International, Giando Africa (Flash Credit Africa), and Risine Credit.
Over the last year, the Central Bank of Kenya (CBK) has diligently reviewed and evaluated 401 applications. This recent batch of approvals is the third set of licenses granted, with previous ones issued in January and September of 2022. Throughout the process, the CBK has worked closely with each applicant, conducting rigorous evaluations of their business models, consumer protection protocols, and assessing the suitability and integrity of proposed shareholders, directors, and management.
The growth of digital lending in Kenya has been driven by the widespread adoption of mobile phones and the increasing need for fast and convenient access to credit. Digital lending platforms have become a popular alternative to traditional banks, which often require lengthy documentation and collateral for loans. In contrast, digital lenders can quickly assess creditworthiness and disburse funds within minutes.
However, the growth of digital lending in Kenya has also raised concerns about high-interest rates, aggressive debt collection practices, and data privacy. The CBK has been working to regulate the industry and protect consumers, issuing guidelines for digital lenders in 2019, and requiring lenders to be licensed and disclose all fees and charges.
The licensing of 10 additional digital credit providers is a positive development for the industry, as it promotes competition and innovation, which can lead to improved services and lower costs for consumers. It also demonstrates the CBK’s commitment to regulating the industry and ensuring that consumers are protected.
However, the CBK has also urged other applicants who are at different stages in the process to submit pending documentation expeditiously to enable completion of the review of their applications. This shows that the CBK is taking a cautious and thorough approach to licensing digital credit providers, which is important to ensure that only reputable and well-managed companies are allowed to operate in the industry.