The Central Bank of Kenya is updating the country’s payment systems law to enable it to issue licenses to fintech startups.
Governor Kamau Thugge mentioned that the process of amending the law is nearing completion and expects it to be finalized soon.
Central Bank of Kenya to License Fintech Startups
The Central Bank of Kenya (CBK) is preparing to issue operating licenses to fintech startups, including Nigerian payment firms like Chipper Cash and Flutterwave, which are currently seeking licenses. CBK Governor Kamau Thugge confirmed that amendments to the National Payment Systems Act of 2011 are underway to legalize the operations of fintech firms.
According to a Techcabal report, obtaining these licenses would be particularly beneficial for remittance firms and payment providers. Previously, some firms, like Flutterwave, faced regulatory scrutiny, including bank account freezes by the Asset Recovery Agency. This action followed accusations from former CBK Governor Patrick Njoroge that Flutterwave was operating in Kenya without the necessary license.
CBK Updates Approach to Fintech Regulation
In a letter dated July 9, 2022, addressed to CEOs of Kenyan financial institutions, the Central Bank of Kenya (CBK) initially advised against transacting with Nigerian fintech startups Flutterwave and Chipper Cash. However, the CBK later softened its stance, now taking steps to accommodate fintech firms.
CBK Governor Kamau Thugge indicated that the bank is in the process of updating and amending the Payments Act to introduce new regulations. These changes aim to guide the operations of payment service providers more effectively in Kenya’s fintech space.
According to reports, the proposed amendments to the National Payment Systems Act aim to address regulatory gaps that have hindered the growth of Kenya’s fintech sector. If implemented, these amendments could level the playing field, enabling fintech startups to compete more equitably with traditional financial institutions that currently dominate the industry.
Important: Please note that this article is only meant to provide information and should not be taken as legal, tax, investment, financial, or any other type of advice.
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