The Central Bank of Kenya (CBK) has announced its intention to issue payment licenses to fintech startups operating in the country. This represents a significant departure from previous regulatory stances and aims to provide clarity and legitimacy to the operations of these innovative firms.
Among the leading candidates for these licenses are prominent players like Flutterwave and Chipper Cash. Governor Kamau Thugge confirmed that the CBK is actively amending the National Payment Systems Act of 2011 to establish a clear legal framework for fintech operations.
This move comes as a relief for remittance and payment providers, who have faced legal uncertainties and investigations over concerns of money laundering. Operating in a regulatory gray area has hindered their growth and expansion efforts.
Governor Thugge emphasized the importance of updating the existing payment systems legislation, stating that the process is underway to create a new act and accompanying regulations to guide payments service providers.
The governor’s statements, made during a post-monetary policy committee press briefing, underscore CBK’s commitment to addressing the challenges faced by fintech firms. Currently regulated under various laws, including the Central Bank of Kenya Act and the National Payment Systems Regulations, fintech companies have encountered obstacles due to legal ambiguity.
Conflicts between fintech startups and Kenyan authorities have been evident, with law enforcement agencies taking actions against them over concerns of money laundering. Previous directives from CBK, such as ordering financial institutions to sever ties with fintech firms, have highlighted the need for a clearer regulatory framework.
By introducing transparent regulations and granting payment licenses to fintech startups, CBK aims to foster a more inclusive and innovative payments ecosystem in Kenya. This move signals a collaborative effort between regulators and industry players to drive financial inclusion and economic growth in the region.
photo source: Google
By: Montel Kamau
Serrari Financial Analyst
12th June, 2024
