Fintechs may finally get regulatory clarity as Kenya’s Central Bank reviews laws

The Central Bank of Kenya (CBK) is preparing to review the Central Bank Act and the Banking Act in what could become one of the most consequential regulatory shifts in the country’s digital finance and banking sectors.

In a tender notice on Monday, the regulator has invited consultants to help review the two laws that define its powers in a bid to strengthen provisions related to digital banking, fintech regulation, consumer protection, and cybersecurity.

The review could solve a legal grey area that has slowed down the expansion of fintechs in the country, allowing commercial banks and telcos to dominate. CBK has delayed issuing operating licences to fintechs like Chipper Cash in the absence of enabling laws.

“The objective of this consultancy is to undertake a comprehensive legal review of the Central Bank of Kenya Act (CBK Act) and the Banking Act to ensure alignment with current financial sector developments, international best practices, and Kenya’s evolving regulatory needs,” CBK said.

Kenya’s financial sector is regulated under the Central Bank of Kenya Act, the Banking Act, the National Payment Systems Act, alongside the National Payment Systems Regulations of 2014, and the e-money Regulations of 2013, all of which have unclear provisions on fintechs and neobanks.

Legal grey zone

Over the past decade, Kenya has become one of Africa’s most active fintech markets. Payments startups, savings apps, lending platforms, payroll tools, remittance companies, and the ecosystem has expanded well beyond traditional banking.

However, regulation has moved unevenly. Currently, CBK directly supervises commercial banks, microfinance banks, mortgage financiers, and—since 2022—digital lenders. The last category only came under formal regulation after public outrage over predatory lending apps forced intervention. Before that, hundreds of digital credit providers operated in a grey zone.

Outside digital lending, many fintechs still sit beyond CBK’s immediate mandate. This has put remittance and payment startups on a collision course with Kenyan authorities, with law enforcement, including the Financial Reporting Sector (FRC) and the Asset Recovery Authority (ARA), freezing accounts and seizing assets of sector players on money laundering charges.   

In 2022, CBK ordered local financial institutions, including banks and mobile money service providers, to cut links with fintechs, citing unspecified threats to the country’s financial systems. The regulator said then that the firms were operating without authorisation.