Central Bank of Kenya to License Fintech Startups

The Central Bank of Kenya (CBK) is set to issue operating licenses to fintech startups, including Nigerian payment firms Chipper Cash and Flutterwave. This move comes as part of the CBK’s efforts to amend the National Payment Systems Act of 2011, facilitating the legal operation of fintech firms in Kenya.

CBK Governor Kamau Thugge announced that the bank is updating the Payments Act to provide a clearer regulatory framework for payment service providers. “We are in the process of updating and amending the Payments Act, basically coming up with a new act. We hope to be able to finish that soon and also the regulations and that would guide our way forward in terms of payment service providers space,” Thugge said.

The licensing of fintech startups is expected to benefit remittance firms and payment providers significantly. Previously, these firms have faced regulatory challenges, including investigations and raids. Notably, Flutterwave had its bank accounts frozen by the Asset Recovery Agency after accusations of operating without a license from the former CBK Governor, Patrick Njoroge. In July 2022, the CBK advised Kenyan financial institutions against transacting with Flutterwave and Chipper Cash.

However, the CBK has since softened its stance, and authorities are now taking steps to integrate fintech firms into the financial system. The proposed amendments to the National Payment Systems Act aim to close regulatory loopholes that have hindered the growth of Kenya’s fintech sector. If enacted, these changes would enable fintech startups to compete with traditional financial institutions, promoting innovation and competition within the industry.