The news:
- The Central Bank of Kenya (CBK) has announced plans to grant payment licences to financial technology startups soon.
- This development is an important review of an initial regulation, and it's expected to expand the country's payment market.
- Two Nigerian-born fintech companies, Flutterwave and Chipper Cash, are reportedly vying for licences, among others.
Kamau Thugge, CBK governor, said the apex bank is working tirelessly to review the National Payment Systems Act of 2011 to provide a legal framework for fintech companies to operate.
“We are in the process of updating and amending the Payments Act, basically coming up with a new act,” Thugge explained.
If the change goes through, it's expected to benefit companies that provide remittance and payment services that have initially been investigated and raided by Kenyan authorities on suspicion of money laundering.
The new CBK proposed changes to the National Payment Systems Act, aiming to let fintech startups in Kenya register and receive licences. This could eliminate a legal barrier that has hampered the growth of fintechs in the country, allowing commercial banks and telcos to dominate.
Following a question by one publication concerning the status of Flutterwave and Chipper Cash registration in the country during the post-monetary policy committee (MPC) press briefing, the bankers' bank hopes to finish the amendment as soon as possible to begin the process of “that would guide our way forward in terms of payments service providers space.”
The East African nation's financial sector is regulated under the Central Bank of Kenya Act, the National Payment Systems Act with the National Payment Systems Regulations of 2014, and the e-money Regulations of 2013.
In 2022, the financial regulator reportedly ordered financial institutions in the country, including banks and mobile money service providers, to stop dealing with fintechs.
At the time, CBK claimed that the fintechs were operating without authorisation, citing unsubstantiated threats to Kenya's financial systems.
