Digital lenders have expressed hope that Kenyan legislators and the Central Bank of Kenya will support the development of progressive regulations to spur the growth of FinTech and create more opportunities for Kenyans.
Zenka Finance CEO Duncun Motanya says he sees the industry’s positive contributions to the economy and strategic partnerships as key developments that will drive the industry towards professionalism and delivery of more value to users.
Mr. Motanya says the signing of a FinTech Cooperation Agreement between the Monetary Authority of Singapore and Central Bank of Kenya in late 2019, opens a new collaborative front that will help the local market learn valuable regulatory lessons and adoption of international best practices to take operators in the next growth phase.
The Monetary Authority of Singapore is among the World’s most innovative FinTech hubs that made Singapore one of the first developed countries to set up a regulatory sandbox that allows FinTench companies to experiment with new products and services in a live environment under the close watch of financial market regulators.
“Regulatory sandboxes support innovation and allow authorities to actively participate in the deployment of new products and create the necessary legal frameworks for new types of services. We are very excited by the progress of this development and hopeful that the two authorities will collaborate and accelerate efforts to develop the FinTech space in Kenya,” said Mr. Motanya.
Digital lending is already recording great contributions to the general economy and improving the status of livelihoods through improved access to credit and the creation of job opportunities that has seen close to 3 million people employed both directly and indirectly to reduce poverty rates.
“This far, the country has already established itself as a global leader in mobile money transfer services. In particular, M-PESA has been at the forefront of this growing sector with the value of mobile money transfers accounting for almost 50% of GDP,” Mr. Montonya added.
The growth of M-PESA has institutionalized mobile banking in the country. As of quarter three of 2018, mobile commerce transactions were valued at KES 1.5 trillion. P2P (person to person) transactions, on the other hand, accounted for KES 718 billion.
Kenya’s Information Technology sector has been growing at an average rate of 10 percent accounting for 5 percent of the country’s GDP as of 2019. A recent survey projects Kenya’s financial technology scene will accelerate the country’s gross domestic product growth by 6.3 percent.
The Africa QI 2019 report by the Institute of Chartered Accountants in England and Wales (ICEAW) indicated that the FinTech industry in Kenya was bound to overtake conventional economic drivers.
The Zenka chief affirms that the industry has the potential to grow exponentially as new innovative FinTech companies and digital lenders continue to emerge supported by progressive regulatory frameworks and operating environment.
“At the same time, I believe both the industry and customers expect the legislators to support the professionalization of the industry by creating a framework of minimum requirements for a company to become a digital lender,” Mr. Motonya said.
Some of DLAK’s proposals include set up of minimum capital requirements, experience requirements for key personnel heading and managing the business for instance a minimum of 3 years’ experience in managerial positions in the financial sector, and obligatory reporting to Credit Reference Bureaus (CRBs).
The Association has also put forward its recommendations on the proposed CBK Amendments Act 2020, urging legislators to build on its existing code of conduct that fosters the promotion of transparency, honesty, and fair treatment of customers in all facets of lending and debt collection in the coming up with robust digital lending regulations.