Digital Lenders have at least 6 months to register with the Central Bank of Kenya (CBK) as President Uhuru Kenyatta assented to the Central Bank of Kenya (Amendment) Bill, Public-Private Partnership Bill, and Trustees (Perpetual Succession) (Amendment) Act, all of 2021.
The amended Central Bank Act, 2021 gives CBK powers to license digital lenders in the country as well as ensure the existence of fair and non-discriminatory practices in the credit market.
Consequently, the Competition Authority of Kenya (CAK) requires digital lenders to reveal interest rates, late payment, and rollover fees for their loans before disbursing credit to customers.
According to a CAK report, 77 % of mobile loan borrowers have been forced to pay penalties and were charged to roll over their debts.
Data from the CBK shows that borrowers borrowing digital loans from unregulated lenders surged from 200,000 in 2016 to more than two million in 2019.
This bill comes as a blow to the digital lenders who said that they were not afraid of regulations but were sceptical of the government regulating them which might lead to gagging. Through the Digital Lenders Association, the lenders had started “regulating themselves.”
At the same time, the new Public-Private Partnerships Act repeals the 2013 legislation by providing an elaborate legal framework to cover both national and county level PPP projects.
Further, the new law expands the role of the private sector in PPP initiatives beyond financing to include construction, operation, and maintenance of the projects.
The Trustees (Perpetual Succession) (Amendment) Act, passed by the National Assembly on 19th October this year, seeks to simplify the registration of trusts by, among other reforms, shifting the administration of the process to the new office of the principal registrar of documents.