KENYA Law and Practice Contributed by: Sammy Ndolo, Njeri Wagacha, Brian Muchiri and Sara Ndei, Cliffe Dekker Hofmeyr incorporating Kieti Law LLP
to connect retail investors with these schemes, simplifying the investment process. • Forex trading: online forex trading is gaining popularity in Kenya, and the Capital Markets Authority (CMA) regulates forex brokers offer - ing online foreign exchange trading platforms as well as entities that act as a link between the foreign exchange market and a client in return for a commission or mark-up in spreads. • Crowd-funding platforms: online platforms for crowdfunding allow investors to participate in a range of debt or equity-based financ - ing opportunities. The CMA regulates these platforms to ensure investor protection when offered to investors in Kenya. Insurtech Kenya’s historically low insurance penetration rate has spurred innovation in the insurtech sec - tor. Start-ups and established insurers are lever - aging technology to improve accessibility. This includes digital platforms for coverage access, claims submission and policy management, as well as the development of microinsurance products tailored to underserved populations. Edtech Following the closure of schools in 2020 as a result of the COVID-19 pandemic, Kenya has seen increased adoption of edtech. Edtech in Kenya provides a variety of services such as the provision of revision papers, the supply of textbooks, and interactive learning using tech - nologies such as USSD and mobile applications. Edtech is tailored to accommodate persons with various levels of technological literacy. Agritech With 70% of the rural population in Kenya work - ing in the agricultural industry, agritech has seen a steady uptake. Agritech solutions offer farm -
ers vital resources such as soil quality testing, expert advice, access to credit for small-scale operations, and a marketplace for products and services. 2.2 Regulatory Regime There is no separate regime for the regulation of fintech in Kenya, with fintech products and ser - vices falling under the ambit of various financial laws that already exist in Kenya. The main pieces of legislation that govern the financial services sector and the corresponding regulators include the following. Digital Banking and Digital Lending The Central Bank of Kenya Act, Cap 491 of the Laws of Kenya establishes the CBK, which regu - lates and supervises various deposit-taking and non-deposit-taking financial institutions, such as banks, microfinance institutions, NDCPs and PSPs. The Banking Act, Cap 488 of the Laws of Kenya, provides for the licensing and regulation of banks that undertake “banking business” in Kenya (ie, accepting deposits from the Kenyan public and using said deposits for lending or investment). The Microfinance Act, No 19 of 2006, provides for the licensing and regulation of deposit-taking microfinance institutions operating in Kenya and providing services to small or micro enterprises or low-income households. The Central Bank of Kenya Prudential Guidelines guide banks on the conduct of their operations, including licensing procedures, capital adequa - cy requirements and the enforcement of banking laws and regulations.
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