How to get a Digital Credit Provider (DCP) Licence in Kenya

Since the introduction of Mpesa in Kenya in 2007, Kenyans have been at the forefront of developing ground-breaking innovations to boost financial inclusion and economic growth. One such area of innovation is in the growth of digital lending platforms in Kenya such as M-Shwari, KCB Mpesa and Tala. These platforms have created a platform for unbanked Kenyans to access unsecured loans which are sent directly to their mobile phones.

However, there are still gaps in the digital lending space that require new players to join the fray. But what is the procedure for getting licensed as a digital credit provider?

1. Stage 1 – Name Approval
The first stage in getting the licence is to get your DCP’s name approved. Every DCP has a unique value proposition and targets a particular audience hence when you are choosing a name you want one that will resonate with your audience. For example, if you are targeting SMEs, you might want to call your DCP – “SME- Pesa”

2. Stage 2 – High-Level Brief

The second thing that you will need is a high-level brief that details your business plan and model, target market, delivery/ distribution channels and the unique value proposition of the DCP. This is used to gauge the seriousness and capacity of the DCP to offer digital lending services and to weed out the “jokers” from the serious. You will also need to accompany the brief with a commissioned declaration on what your sources of funds are so as to prevent incidences where a digital lending service is used as a conduit for money laundering.

3. Stage 3 – Application for a Licence
The third and final step involves the actual application to the Central Bank of Kenya. This is the most sensitive area as it is where most applicants are disqualified because they have not prepared the relevant documentation that is needed. Some of the documents needed here include the Fit & Proper Forms to be filled by the DCP’s proposed Directors, the relevant agreements with Telecommunications Service Providers, a copy of the Companies’ Data Protection Policies, Dispute Resolution Policies, and the Terms and Conditions for the DCP, among other documents.

4. Stage 4 – Data Submission & Licensing
If the CBK is satisfied that all the above-listed requirements have been met, they will ask you to do a dry run of how you would conduct “regulatory reporting.” Once completed, the Applicant will pay the licensing fees of Kshs 20,000 and receive their DCP Licence.

The writer is a lawyer who specializes in offering legal services to people in technology, you can reach him through

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