{"id":5334,"date":"2022-09-19T07:37:31","date_gmt":"2022-09-19T07:37:31","guid":{"rendered":"https:\/\/koriatlaw.com\/?p=5334"},"modified":"2022-09-19T07:37:31","modified_gmt":"2022-09-19T07:37:31","slug":"how-to-set-up-digital-lending-business-in-kenya","status":"publish","type":"post","link":"https:\/\/koriatlaw.com\/2026\/2022\/09\/19\/how-to-set-up-digital-lending-business-in-kenya\/","title":{"rendered":"HOW TO SET UP DIGITAL LENDING BUSINESS IN KENYA"},"content":{"rendered":"\n
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INTRODUCTION<\/strong><\/em><\/p>\n\n\n\n

Digital lending in Kenya is not only growing but also becoming highly regulated as the Kenyan Government is taking a very strong stance on regulatory compliance and consumer protection matters. Not only are money lenders now required to be registered and licensed (which is a new development), they are also subject to stringent operational conditions and required to shun predatory practices, money laundering, misuse of customer data, unconscionable interest rates and other bad practices.<\/p>\n\n\n\n

One of our lawyers was in Kenya to study the regulatory requirements, costs, procedures and timelines for incorporation and licensing of a digital lending business in Kenya and Rwanda.<\/p>

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Below is a simplified write up on how to set up a digital lending business in Kenya:<\/p>\n\n\n\n

WHO IS A DIGITAL LENDER IN KENYA?<\/em><\/strong><\/p>\n\n\n\n

A Digital\nCredit Provider (\u201cDCP\u201d) in Kenya is a person or organization\nlicensed by the Central Bank of Kenya (\u201cCBK\u201d) to provide credit facilities or loan services\nthrough digital channels like the internet,\nmobile devices, computer devices, applications or any other digital system as\nmay be prescribed by the CBK.<\/p>\n\n\n\n

Prior to the year 2022, DCPs in Kenya were unregulated. However, on the 18th of April 2022, the Governor of the CBK issued a six months’ notice for DCPs that were unregulated to apply to CBK on or before September 2022 for\nlicences or cease\noperations.<\/p>\n\n\n\n

By the Central Bank of Kenya (Digital Credit\nProviders) Regulation 2022<\/em><\/strong> (\u201cRegulation<\/em>\u201d),\nany company seeking to establish a digital credit or money lending business in\nKenya must obtain a DCP licence from the CBK. It is an offence to carry on the business of digital\ncredit without obtaining the DCP licence and anyone found guilty shall be liable upon conviction to a\nfine of Ksh 500,000 (approximately $4,200)\nor imprisonment for a term of five years or to both. <\/p>\n\n\n\n

Under the Regulation, the following entities are\nexempted from obtaining a DCP licence:<\/p>\n\n\n\n

    \n
  1. Institution\nlicensed under the Banking Act of Kenya;<\/li>\n\n\n\n
  2. An\ninstitution licensed under the Microfinance Act of Kenya;<\/li>\n\n\n\n
  3. A Sacco\nSociety licensed under the Sacco\nSocieties Act;<\/li>\n\n\n\n
  4. The Kenya\nPost Office Savings Bank supervised under the Kenya Post Office Savings Bank\nAct; <\/li>\n\n\n\n
  5. Credit\narrangements involving the provision of credit by a person that is merely\nincidental to the sale of goods or provision of services by the person; <\/li>\n\n\n\n
  6. Any\nother entity approved by the CBK.<\/li>\n<\/ol>\n\n\n\n

    ALSO: you may read about How to Set Up a Money Lending\nCompany in GHANA<\/a>\nor NIGERIA<\/a>\n<\/em><\/strong><\/p>\n\n\n\n

    CAN DIGITAL CREDIT PROVIDER TAKE\nDEPOSITS?<\/em><\/strong><\/p>\n\n\n\n

    No. A DCP is\nprohibited from collecting\ndeposits in any form in the course of carrying out digital lending business in Kenya.<\/p>\n\n\n\n

    WHAT\nIS THE SHARE CAPITAL REQUIREMENT FOR A <\/em><\/strong>DIGITAL\nCREDIT PROVIDER COMPANY<\/em><\/strong> IN <\/em><\/strong>KENYA<\/em><\/strong>?<\/em><\/strong><\/em><\/strong><\/p>\n\n\n\n

    There is no provision for minimum share capital in\nsetting up a company in Kenya However, we will suggest a share capital of\nKsh 10,000,000 <\/em><\/strong>when setting up a digital credit provider company in\nKenya.<\/p>\n\n\n\n

    WHAT <\/em><\/strong>ARE THE STEP BY STEP <\/em><\/strong>PROCEDURE<\/em><\/strong>S<\/em><\/strong> FOR <\/em><\/strong>LICENSING A DIGITAL CREDIT PROVIDER <\/em><\/strong>COMPANY <\/em><\/strong>IN <\/em><\/strong>KENY<\/em><\/strong>A?<\/em><\/strong><\/p>\n\n\n\n

    The process for obtaining\nDCP licence is in three stages and they are: <\/p>\n\n\n\n

    Approval\nof Name Stage<\/em><\/strong><\/p>\n\n\n\n