No industry exists in the form of an individual. Instead, there are tentacles spreading all around it, and attached to them, the suction cups gripping things that collectively form an ecosystem. The FinTech industry in Kenya is no exception.
When the Central Bank of Kenya (CBK) announced that Flutterwave and Chipper Cash were not licensed to practice their art form in Kenya, it swirled into a stormy froth. The kind that invokes posts on LinkedIn. It prompted a response from the Association of FinTechs In Kenya that we were all waiting to hear.
It said, “AFIK (Association Of FinTechs In Kenya) takes cognisance of the recent directive by CBK regarding the operations of some industry players who have been offering services without the requisite licensing. We encourage all our members and industry players to ensure compliance with all regulatory requirements.”
AFIK declared that the Nigerian FinTech Flutterwave and Uganda’s Chipper Cash situation could be cured with “dialogue and genuine partnership between policymakers, regulators, and industry,” a position reiterated by a May 2022 industry report by TheCityUK FinTech Project and PWC, FinTech In Kenya: Towards An Enhanced Policy And Regulatory Framework.
The study goes as far as making recommendations that “would help pivot the current regulatory regime to the realities of a rapid growth industry and the emergence of new FinTech providers and new technologies.” This is paired with high expectations and confidence in the roles of policymakers and regulators.
This statement brings into sharp relief what regulation must focus on to grow, and layer, the ecosystem. This can be done by:
- Fostering innovation and the development of new products and services.
- Boosting financial inclusion while ensuring consumer confidence and trust in market participants.
- Encouraging competition by making the market accessible to new entrants.
- Maintaining stability in the market through right-touch regulatory oversight and supervision.
FinTech in Kenya is tied not just to the policy and regulatory environment, but to the continued success of the Kenyan economy. “It is without a doubt that FinTech is a powerful ecosystem that has both economic and social impacts. The old adage – with great power comes great responsibility – applies to the FinTech community too. FinTech solutions more often than not cut across various regulatory frameworks and we encourage all industry players to secure the relevant licensing to operate,” states AFIK.
Part of what has tilled the FinTech land can be “largely be attributed to the regulatory agility that allowed the development of a framework for homegrown financial innovation solutions like mobile money,” the statement further read.
As earlier indicated, policymakers and regulators do, in fact, have the power; so much so they promote the growth of the FinTech ecosystem, as was seen in the history of Kenyan FinTech. The growth of the FinTech industry locally will be determined by the confidence we can instill in innovators and investors in FinTech.
“Kenya has been described as the cradle of FinTech through innovations that are the benchmark for the transformation of financial services globally. FinTech has played a critical role in spurring the Kenyan economy through financial inclusion and modernised payments. We have been described as a world leader in mobile money.”