Kenya's Central Bank licenses 12 more digital lenders

Kenya's Central Bank has recently granted 12 licenses to digital lending firms, bringing the total number of approved lenders to 22 out of the 381 companies that had applied for licenses. The delays in the licensing process have caused uncertainties for market players. Kevin Mutiso, the Chairman of the Digital Lenders Association of Kenya, shed light on the situation during an interview with CNBC Africa. Mutiso highlighted that the Central Bank had set a deadline of September 17, 2022, for all existing players to submit their documents for licensing. According to the law, the Central Bank is required to notify applicants within 60 days of their application status. However, only 22 out of 288 applicants have received licenses so far, leading to anxieties among the remaining players awaiting approval. Mutiso reassured that companies who submitted their applications before the deadline can continue business without breaching any laws. He emphasized the importance of customers understanding the situation and continuing to repay their loans even if a lender is yet to be licensed. In terms of loan disbursement, digital lenders in Kenya have disbursed close to 1.5 billion US dollars over the past eight years. Despite the regulatory process impacting growth, the industry has not seen a reduction in lending but rather a slowdown in growth. Mutiso explained that companies are focusing on existing customers and increasing loan amounts rather than targeting new borrowers. The goal of the regulatory process is to clean up the sector and eliminate predatory lending practices. With a decrease in the number of providers from 381 to 22, the focus is on ensuring compliance with licensing requirements, consumer redress, and data protection to promote a more transparent and customer-friendly lending environment. The future looks promising as the industry adapts to new regulations, with improvements in pricing and customer protection measures. Mutiso encouraged Kenyans to report any violations to ensure a fair and ethical lending landscape. Despite the progress, there remains a significant gap of 200 billion shillings per month in lending to micro and small media enterprises in Kenya, indicating further opportunities for growth and financial inclusion. As the licensing process continues, players in the digital lending industry are optimistic about the positive changes and enhancements in the market.