KENYA Law and Practice Contributed by: Sammy Ndolo, Njeri Wagacha, Brian Muchiri and Valere Nyaboke, Cliffe Dekker Hofmeyr
2.2 Regulatory Regime There is no standalone regulatory regime for fintech in Kenya. Instead, fintech products and services fall under various existing financial laws. In addition to the VASPA, the main legislation governing the financial services sector – and the corresponding regulators – is outlined below. Digital Banking and Digital Lending The Central Bank of Kenya Act, Cap 491 establishes the Central Bank of Kenya (CBK), which regulates and supervises various deposit‑taking and non‑depos - it‑taking financial institutions, including banks, micro - finance institutions, non‑deposit‑taking credit provid - ers and payment service providers (PSPs). The Banking Act, Cap 488 provides for the licensing and regulation of banks conducting “banking busi - ness” in Kenya. This includes accepting deposits from the Kenyan public and using those deposits for lend - ing or investment. The Microfinance Act, Cap 493C provides for the licensing and regulation of deposit‑taking microfi - nance institutions operating in Kenya and offering services to small or micro enterprises or low‑income households. The Central Bank of Kenya Prudential Guidelines guide banks on operational conduct, including licens - ing procedures, capital adequacy requirements and enforcement of banking laws and regulations. Digital Lending The Central Bank of Kenya (Digital Credit Providers) Regulations, 2022 (DCP Regulations) provide for the licensing and regulation of non‑deposit‑taking digital credit providers (NDCPs). Payment Services The National Payments Systems Act, Cap 491A pro - vides for the authorisation and regulation of payment service providers in Kenya, including e‑money issuers, electronic retail providers and cash merchants. The Central Bank of Kenya (Money Remittance Regu - lations), 2013 provide for the licensing and regulation of money remittance operators.
• Brokerage services – start-ups are collaborating with licensed collective investment schemes to simplify the process for retail investors to partici - pate in various investment products. • Forex trading – online foreign exchange trading continues to grow in popularity. The Capital Mar - kets Authority (CMA) regulates both forex brokers offering online platforms and intermediaries who connect clients to the forex market in exchange for commissions or spread mark‑ups. • Crowdfunding platforms – online crowdfunding platforms provide investors with access to debt‑ and equity‑based financing opportunities. These platforms are regulated by the CMA to ensure adequate investor protection when offered within Kenya. Insurtech Kenya’s historically low insurance penetration rate has fostered considerable innovation in insurtech. Both start-ups and established insurers are deploying tech - nology to improve accessibility and efficiency. Inno - vations include digital platforms that facilitate policy access, claims submission, and policy management, as well as microinsurance products designed to serve underserved populations. Edtech Following the nationwide school closures in 2020 dur - ing the COVID‑19 pandemic, Kenya experienced sig - nificant growth in edtech adoption. Current solutions offer a range of services, including revision materials, textbook supply, and interactive learning delivered through mobile applications and USSD technology. These platforms are designed to cater to users with varying levels of digital literacy. Agritech Given that approximately 70% of Kenya’s rural pop - ulation is engaged in agriculture, agritech solutions have seen steady uptake. These technologies provide critical tools and resources to farmers, including soil quality testing, expert agricultural advice, access to credit for small‑scale operations, and digital market - places for agricultural products and services.
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