The Central Bank of Kenya (CBK) is poised to open the door for fintech startups, signaling a shift in its regulatory stance, by starting to issue payment licenses to the fintech firms.
This will provide a much-needed legal framework for their operations, addressing a grey area that has hampered their growth in Kenya.
This move is expected to shake up East Africa’s largest payments market, currently dominated by traditional banks and telecom companies.
“We’re working on updating the National Payment Systems Act of 2011,” said CBK Governor Kamau Thugge, according to reports. “This will establish a clear path forward for payment service providers, including fintech companies.”
This decision comes after remittance and payment providers faced investigations and even raids by Kenyan authorities on suspicion of money laundering.
The lack of clear regulations for fintech created a clash with regulators like Financial Reporting Sector (FRC) and the Asset Recovery Authority (ARA) . In 2022, the CBK ordered financial institutions to sever ties with unauthorized fintech firms.
The news is particularly exciting for companies like Flutterwave and Chipper Cash, who have been eagerly awaiting licensing. With clear regulations in place, these and other fintech startups can now compete on a level playing field, potentially revolutionizing Kenya’s financial landscape.