• The public has raised about the predatory practices of the unregulated Digital Service Providers.Among the complaints include high payback cost, unethical debt collection practices and the abuse of personal information.
• The government of Kenya has launched its Digital Credit Provider, Hustler Fund, as it seeks to capitalize on the lucrative loan business

The Central Bank of Kenya released a press statement on March 27, 2023, announcing the licensing of 10 additional Digital Credit Providers. This brings the number of Licensed providers to 32, following the list of 12 DCPs that were given the green light in January 2023, and 10 others in September last year.

Last year, the CBK declared that any DCP that was not licensed, Pursuant to Section 59(2) of the Central Bank of Kenya Act in the Kenyan 2010 constitution, would have to cease operations. The Central Bank has received 401 applications since March 2022, stating that it is working closely with applicants to review their applications.

Data protection has been a key concern in the Digital lending ecosystem. Many of the DCPs existing in the country have unlawfully manipulated users’ data. The public has raised about the predatory practices of the unregulated Digital Service Providers. Among the complaints include high payback cost, unethical debt collection practices and the abuse of personal information.

 In response, the CBK has engaged the Office of the Data Protection Commissioner in the licensing process to protect consumer data and manipulation.

Key Focuses in the Licensing Process

In Pursuant of the Regulations stated in the CBK Act, the focus of the engagements has been, among other things, on the business model, consumer protection and fitness, propriety of proposed shareholders, directors and management.

“Other applicants are at different stages in the process, largely awaiting the submission of requisite documentation. We urge these applicants to submit the pending documentation expeditiously to enable completion of the review of their applications,” the press release read in part.

The Central Bank of Kenya had also called out to the public to report any unregulated digital service providers to their official email dcps@centralbank.go.ke.

Additionally, the government of Kenya has launched its Digital Credit Provider, Hustler Fund, as it seeks to capitalize on the lucrative loan business.

Licensed Digital Service Providers in Kenya

Here is a list of the Licensed DCPs in Kenya as released by the Central Bank of Kenya as at March 23, 2023.

Regulations that DCPs should adhere to as per CBK Act

Pursuant to the Central Bank of Kenya Act, PART II, among the regulations are as follows:

1. Notification of the applicant’s registered address.
2. A certified copy of the Memorandum and Articles of Association of any corporate body that has a significant shareholding in the applicant.
3. A certified copy of the constitutive documents of an unincorporated body that has a significant shareholding in the applicant.
4. A description of the information and communication technology system to be used in the applicant’s operations and independent assurance of the systems.
5. Description of delivery channels or platforms to be deployed by the applicant.
6. A description of, and terms and conditions of credit products and services which the applicant intends to provide.
7. An agreement with a telecommunication or other service provider for the provision of the channel or platform for the provision of digital credit.
8. The applicant’s Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT) policies and procedures.
9. The applicant’s data protection policies and procedures.
10. Applicant’s consumer redress, mechanisms policies and procedures.
11. A description and evidence of sources of funds to be invested in the applicant.
12. Duly filled fit and proper forms for the directors, chief executive officer and senior officers and significant shareholders in Form CBK DCP 2 and Form CBK DCP 3, respectively.
13. The applicant’s credit policy, code of ethics and market conduct.
14. Applicant’s pricing model and parameters.
15. The applicant’s corporate governance policy.
16. Certificate of good conduct, tax compliance certificate and credit reference bureau report for each of the digital credit provider’s individual significant shareholders, directors, chief executive officer and senior officers

You can access more details on the application requirement here.

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