The Central Bank of Kenya has licensed only ten digital credit providers out of the 288 applications pursuant to new law.
Through a statement, CBK revealed that it is in the process of reviewing those that have not been approved meaning that the list might go higher than ten companies, and there is a high chance that the majority of them could get rejected.
The CBK has also said that the companies that have not been named in the said list must stop their operations immediately up to that time their license review process will be approved.
“We urge these applicants to submit the pending documentation expeditiously to enable the completion of the review of their applications. All other unregulated DCPS that did not apply for licensing must cease and desist from conducting digital credit business,” said CBK.
The ten companies are; Ceres Tech Limited, Getcash Capital Limited, Giando Africa Limited (Trading as Flash Credit Africa), Jijenge Credit Limited, Kweli Smart Solutions Limited, Mwanzo Credit Limited, MyWagepay Limited, Rewot Ciro Limited, Sevi Innovation Limited, and Sokohela Limited.
This follows the lapse of the 6-month transition period after CBK digital online regulations were published back in March.
The new regulations published by the country’s financial regulator required digital lenders to get a license from the country’s monetary authority or wind down their operations by September.
The digital lenders were previously only required to register the businesses to begin operations in the country.
Disclosing the source of funds, the CBK said, is meant to ensure that lenders are not engaging in financial crimes like money laundering.
“A digital credit provider shall provide to the Bank (CBK) the evidence and sources of funds invested or proposed to be invested in the digital credit business and demonstrate that the funds are not proceeds of crime,” read the DCP regulations.
Development Financial Institution (DFIs), commercial banks, private equity firms and high-net-worth individuals are some of the popular sources of funding, especially debt, which is used for onward lending by creditors in the digital space.
The new regulations come into effect after the former President, Uhuru Kenyatta, assented to the CBK Act in December last year, giving the bank the authority to issue digital lenders licenses and to ensure “the existence of fair and non-discriminatory practices in the credit market,” bringing order to a sector that had for years regulated itself.