Kenya’s National Treasury is planning major changes to how digital lenders and other non-deposit-taking credit providers operate in the country.
Under the proposed Business Law (Amendment) Act, 2024, the government wants to introduce a new licensing system for non-deposit-taking credit providers (NDTCPs).
Treasury Cabinet Secretary John Mbadi told the Senate that the goal is to tighten oversight of big digital lenders while making it easier for smaller, low-risk operators to do business.
At the heart of the proposal is stronger supervision by the Central Bank of Kenya (CBK).
The reforms specifically target large lenders that dominate the market.
Out of 126 licensed NDTCPs, the top 10 firms control 72.6 percent of the total loan book, about Ksh.45.5 billion out of Ksh.76.8 billion.
According to Mbadi, lenders of this size pose greater risk to the financial system and should therefore be subjected to closer monitoring and stricter regulatory checks.
If Parliament approves the changes, Kenya will move to a tiered licensing framework.
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This means smaller lenders with limited capital and modest loan portfolios will face simpler licensing and compliance requirements.
On the other hand, bigger firms with large loan books will undergo tougher scrutiny and tighter supervision.
The reforms will also widen the regulatory net since oversight will no longer focus only on digital mobile lenders.
Other fast-growing credit models, including buy-now-pay-later services, peer-to-peer lending platforms, and pay-as-you-go financing arrangements, will also fall under the new rules.
Mbadi said consumer protection is another key area of focus.
He is proposing to significantly increase penalties for lenders found harassing or mistreating borrowers.
Fines could rise to as much as Ksh.2 million, up from the current Ksh.500,000, sending a strong signal to rogue operators.
The proposed changes are designed to bring more order, accountability, and stability to Kenya’s rapidly expanding digital credit market, while ensuring that responsible lenders can continue to operate and grow.
