The Central Bank of Kenya (CBK) is updating the country’s payment systems law to enable it to issue operating licenses to fintech startups. Governor Kamau Thugge anticipates completing the amendment process soon.
Central Bank Aims to Support Fintech Startups
The CBK will soon start issuing operating licenses to fintech startups, including two Nigerian payment firms, Chipper Cash and Flutterwave, which are currently seeking licenses. Governor Kamau Thugge announced that the bank is amending the National Payment Systems Act of 2011 to allow fintech firms to operate legally.
According to a Techcabal report, the issuance of these licenses would be a significant boon for remittance firms and payment providers, which have previously faced investigations and raids by regulators. For instance, the Nigerian fintech giant Flutterwave had its bank accounts frozen by the Asset Recovery Agency after the then-CBK Governor Patrick Njoroge accused it of operating in Kenya without a license.
As a result, on July 9, 2022, the CBK issued a letter to CEOs of Kenyan financial institutions advising against transacting with Flutterwave and another Nigerian fintech startup, Chipper Cash. However, the CBK has since softened its stance, and authorities are now working to accommodate fintech firms.
“We are in the process of updating and amending the Payments Act, essentially creating a new act. We hope to finish this soon, along with the regulations, which will guide our approach to the payment service providers space,” Governor Thugge stated.
The report explains that the proposed amendments to the National Payment Systems Act aim to address a loophole that has hindered the growth of Kenya’s fintech sector. If enacted, these changes would enable fintech startups to compete with traditional financial institutions that currently dominate the industry.
Source: news.bitcoin.com
