The Central Bank of Kenya (CBK) is preparing to grant operating licenses to fintech startups, including Nigerian payment firms Chipper Cash and Flutterwave, which are in the process of securing permits. CBK Governor Kamau Thugge announced that amendments to the 2011 National Payment Systems Act are underway to legalize the operations of fintech firms.

According to a Techcabal report, these licenses would significantly benefit remittance firms and payment providers, which have faced regulatory scrutiny and enforcement actions. For instance, Flutterwave, a prominent Nigerian fintech company, had its bank accounts frozen by Kenya's Asset Recovery Agency following allegations of operating without a license from the then-CBK Governor Patrick Njoroge. Subsequently, a letter dated July 9, 2022, advised Kenyan financial institutions against transacting with Flutterwave and Chipper Cash. However, the CBK has since revised its approach, now moving towards accommodating fintech firms.

"We are currently revising and updating the Payments Act, essentially creating a new framework. We expect to complete this process soon, along with drafting regulations that will guide the future operations of payment service providers," stated Governor Thugge.

The proposed amendments to the National Payment Systems Act aim to address loopholes that have hindered the growth of Kenya's fintech sector. Once enacted, these changes would enable fintech startups to compete with traditional financial institutions that currently dominate the market, as outlined in the report.