KENYA Law and Practice Contributed by: Sammy Ndolo, Njeri Wagacha, Brian Muchiri and Valere Nyaboke, Cliffe Dekker Hofmeyr
including the loan amount, interest rate, and repay - ment structure. Finding Partners The lead arranger then approaches other banks or investors, inviting them to participate in the lending group (the syndicate). These prospective lenders review the information package and assess the bor - rower’s risk profile before deciding whether to join. Commitments and Contracts Lenders who choose to participate determine the por - tion of the loan they are willing to fund. The loan terms are refined, and a comprehensive loan agreement is drafted, legally binding all parties involved. Funding and Beyond Once the agreement is signed, the lead arranger dis - burses the funds to the borrower. Often, a designated bank is appointed to administer the loan on behalf of the syndicate and to ensure that the borrower com - plies with the agreed terms. 5. Payment Processors 5.1 Payment Processors’ Use of Payment Rails Payment processors can either use existing payment rails or create and implement new ones. To operate in Kenya, a payment processor must first be authorised as a PSP by the Central Bank of Ken - ya under the National Payment Systems (NPS) Act. Under the NPS Act, a PSP is an entity that: • sends, receives, stores, or processes payments, or provides other services through any electronic system; • owns, possesses, operates, manages, or controls a public switched network for the provision of pay - ment services; or • processes or stores data on behalf of PSPs or users of payment services. Once authorised, a PSP may use existing payment rails to facilitate payments between customers in Ken -
ya, subject to any conditions imposed by the CBK as part of the authorisation. 5.2 Regulation of Cross-Border Payments and Remittances Cross‑border payments and remittances are regulat - ed under the Money Remittance Regulations, which require any person wishing to conduct “money remit - tance business” to obtain a licence from the Central Bank of Kenya. The Money Remittance Regulations define “money remittance business” as a service that enables the transmission of money, or any representation of mon - etary value, without creating payment accounts in the name of the payer or payee, where: • funds are received from a payer solely for the purpose of transferring a corresponding amount to a payee, or to another payment service operator acting on behalf of the payee; or • funds are received on behalf of the payee and made available to them. Currently, the CBK requires Payment Service Provid - ers to obtain a money remittance licence in order to facilitate cross‑border transactions. This requirement stems from the fact that the National Payment System (NPS) Act does not explicitly address the involvement of PSPs in such services. To prevent ambiguity and ensure seamless operations, there is a need for clearer regulatory provisions that directly address this legisla - tive gap. Additionally, banks and deposit‑taking microfinance institutions are exempt from the Money Remittance Regulations and may carry out cross‑border pay - ments and remittances without obtaining a money remittance licence. 6. Marketplaces, Exchanges and Trading Platforms 6.1 Permissible Trading Platforms Different types of marketplaces and trading platforms are permitted in Kenya for the trading of securities. These marketplaces and platforms are regulated by
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