New research shows that existing gaps and the challenges in Kenya’s digital lending policy and regulatory framework impact the evaluation, approval and regulation of new and complex FinTech products and innovations.
According to the research by TheCityUK and the Nairobi International Financial Centre (NIFC) developed by PwC, the gaps and challenges in digital lending policy and regulatory framework stand in the way of Kenya becoming a continental leader in FinTech which could dramatically boost financial inclusion.
The research set out in a report ‘FinTech in Kenya: Toward An Enhanced Policy And Regulatory Framework’, highlights that Kenya does not have substantive regulation around InsurTech services, equity crowdfunding and cryptocurrencies.
TheCityUK and PwC make the case for a series of policy and regulatory enhancements which, if taken forward, could spur greater innovation, unlock capital and investment, and further accelerate financial inclusion.
Joseph Githaiga, Associate Director, PwC Kenya, said: “While Kenya is a leader in the FinTech world, increased impact can be achieved by allowing greater innovation and attracting more investment into Fintech. A supportive regulatory framework is key in attracting more players into the market, setting the stage for increased innovation in the sector.”
Glynn Austen-Brown, Partner, PwC UK, said: “The progress made in digital innovation worldwide calls for countries to recognise the evolution of financial services offerings. Kenya’s efforts in the growth of FinTech can be seen through its forward-thinking financial inclusion strategies and incentivising schemes such as regulatory sandboxes. However, the gaps and the challenges that FinTech players face can serve to blunt the many positives present in the Kenyan fintech ecosystem. Addressing these challenges will allow Kenya to continue to be at the forefront of technology innovation and developments and provide an enabling environment for such innovations to scale in Africa.”
Oscar Njuguna, Acting CEO, Nairobi International Financial Centre (NIFC), said, “Nairobi has potential to be a leading financial services centre in Africa, and to realise this vision, we must strive to be at the forefront of future-focused growth areas like FinTech. Ensuring that our business environment keeps pace with the industry will help ensure we achieve the sustainable growth we need, benefiting our local and regional economy.”
Scott Devine, Head Middle East and Africa, TheCityUK, said, “Kenya stands out as one of the world leaders in mobile money and is home to some of the best-known examples of FinTech-based financial inclusion. Now is the time to build on this strong foundation with government and regulators working closely with FinTech providers in developing policy and regulation that positively shapes the sector and lowers market barriers.”
Formal financial inclusion in services and products in Kenya has grown significantly from 26.7 per cent in 2006 to 83.7 per cent in 2021 – growth largely driven by new financial technology and innovations, especially in mobile money and mobile banking.
The report recommends that Kenya should develop a national FinTech policy framework that supports FinTech transformation and innovation, promotes industry growth and removes duplicative regulations in financial services to create certainty in FinTech services and products.