Kenya's non-deposit-taking lenders, including digital loan apps and other credit businesses that do not take deposits, face much higher costs to stay in business under new Central Bank of Kenya (CBK) regulations.

The new fees

Under the Central Bank of Kenya (Non-Deposit Taking Credit Providers) Regulations, reported in early October:

  • Licensed credit providers pay an annual fee of KES 500,000. Tech-ish reports this is up from KES 20,000.
  • Registered credit providers, a lighter category for smaller lenders, pay KES 250,000 a year.
  • Both fees are due by December 31 each year.
  • Applying for either a licence or registration costs KES 100,000.

Which category a lender falls into depends on its size. A lender starting with at least KES 20 million in capital needs a full licence, while smaller ones register instead.

Paying late

The rules also punish late payment. TechTrendsKE reports a KES 1 million penalty. Tech-ish reads the regulations as requiring a lender that pays within three months after the December 31 deadline to pay double the annual fee. For a licensed lender, that also works out to KES 1 million, and KES 500,000 for a registered one.

Why it matters

The CBK has spent the last few years bringing Kenya's crowded lending market under supervision, after complaints about high charges, aggressive debt collection and the misuse of borrowers' contact lists. Higher fees are likely to push out smaller operators that cannot afford them, leaving a smaller group of better-funded lenders.

Supporters say this will make the sector easier to supervise and safer for borrowers. Critics warn that lenders may pass the extra cost on to customers through higher charges, and that fewer players could mean less competition.

Business Daily reported that the higher compliance fees were set by CBK Governor Kamau Thugge. Lenders and borrowers should check the gazetted text of the regulations for the exact obligations.