Kenya Fintech ecosystem and Regulation

Kenya’s Fintech ecosystem is growing every year, mainly focusing on payment and lending categories (Findexable, 2019). As far as digital lending platforms are concerned, these services are closing the gap for Kenyans who do not have a formal bank account or whose income is not stable enough to borrow from formal financial institutions.

Fintech Lending Regulation

Although the market is growing every year, one of the problems faced by Kenyan lending platforms is that there is very little regulation of the industry. Fintech is currently under Kenya’s existing financial services regulatory framework, which was designed for more traditional products and services. As a result, there are cases where certain Fintech companies are not regulated.

Moreover, the large number of credit institutions willing to lend has stimulated the growth of small businesses, but many users have fallen into debt distress in their absence. This led to the Kenya Credit Bureau (CRB) blacklisting 2.7 million people because they were unable to repay loans as low as US$2 in 2019, which shows that if the product is not effectively regulated, financial inclusion will have some disadvantages (African Business, 2019). Likewise, some products that do not meet consumer protection principles have come under public scrutiny and consumers have been warned against taking them up (Practice Guides, 2021)

In order to reduce the uncertainty, thanks to the collaboration between FinTech players who offer regulated products and services through traditional financial institutions, certain Fintech players have been able to operate without being subjected to direct regulation by the regulators. In case of data protection, since Fintech normally processes personal data, the service providers who process such data are regulated under the Data Protection Act, which provides for the rights of data subjects and prescribes the obligations of data controllers and data processors. (Practice Guides, 2021)

Lending Fintech companies

One lending company in Kenya that has been gaining popularity over the last years is Apollo Agriculture which provides a platform for farmers to access credit and farm inputs through crop health assessment. The platform uses satellite data, agronomic machine learning, remote sensing, and mobile technology for credit assessment. Farmers can also get customized advice regarding the operation through the platform. Last year, Apollo raised $6M series A and has served over 40,000 farmers since inception (Tech Crunch, 2020)

Another lending company is Cherehani, which aims to provide credit and distribute personalized financial literacy content to women and adolescent girls who own micro-enterprises. This in order to reduce the credit – gap to woman in Kenya since the annual credit gap for these micro-enterprises is greater than $1.5 Billion (Cherehani Africa, 2021)

NBFC in Kenya

Among the most popular NBFC in Kenya, Platinum Credit is a leading credit only microfinance institution that give credit solutions such as emergency loans to Civil servants, TSC and employees of some selected companies. Up to date the company is still giving loans to Kenyans during this COVID-19 Pandemic period. Likewise, we can find My Credit, a NBFC company registered in Kenya that offers loans, guarantees, leasing and insurance services. They are a credit only finance company and do not take deposits to finance the loan. Finally, Momentum Credit is another NFBC in Kenya founded in 2017 that seek to provide structured solutions that make credit easily and readily accessible for individuals and SMEs.