The Central Bank of Kenya (CBK) has come out to explain the measures and mechanisms the government has put in place to regulate the activities of Buy Now Pay Later (BNPL) providers in the country.
The regulator further revealed plans the government has in place to develop alternative financing models that are fair and also to genuinely empower Boda-Boda operators.
CBK Governor Dr. Kamau Thugge in his response said that the business of BNPL companies falls within the definition of Digital Credit Business under the Central Bank of Kenya (Digital Credit Providers) regulations, 2022 adding that the institutions are required to be licensed and regulated by CBK.
Thugge stated that CBK’s mandate to license and supervise unregulated Digital Credit Providers (DCPs) was amended in December 2021.
He noted that CBK has received over 500 applications which are at different stages of review and licensing whose focus is to ensure the adequacy of corporate governance structures, viability of capitalization and business models, adequacy of infrastructure, to process human resources and systems, and, consumer protection and data protection mechanisms
According to the Governor, the provisions and measures ensure adherence to the relevant laws, and the interests of customers are safeguarded to prevent rogue lending institutions from violating consumer rights.
He added that the review provides specific administrative and enforcement actions that will be taken against entities that fail to comply with any provision of the law, and where CBK has noted non-compliance of DCPs, it will engage specific licensed DCPs including onsite inspections following the law
“Any affected boda boda operator is at liberty to lodge a complaint with CBK against a BNPL provider who has violated the law,” declared Thugge.
Further, in regards to the government’s plan of developing financial models that are fair, and genuinely empower boda boda operators Thugge said that the purpose of licensing DCPs is to ensure consumers are protected from malpractices such as excessive pricing of their products.
He disclosed that CBK engages with all the DCP licenses to ensure that pricing models are customer-centric and risk-based, and also expects the latter to submit pricing models that are aligned to the provisions of the regulations.
Thugge maintained that all product features and prices must be reviewed and approved accordingly by CBK to ensure that the pricing models are fair, transparent, and empowering for consumers accessing the digital credit product to the ongoing licensed DCPs and all applicants.
By Sharon Atieno and Abundance Mutave
