For fintech startups increasing to Kenya, nothing is tougher than getting an working licence.
A cost service supplier (PSP) licence could take as much as two years as a consequence of approval delays, forcing startups to make use of workarounds comparable to partnerships with telcos, banks and cell cash suppliers.
“We don’t allow companies that we will’t do with no licence, however what we do in Kenya is join licenced events,” Rachael Balsham, East and Southern Africa MD at fintech Onafriq informed TechCabal finally week’s Africa Fintech Summit in Nairobi.
“Safaricom’s M-PESA is licenced to run cell cash companies, and we join them to different licenced events.” Onafriq permits companies to ship and obtain cash throughout 40 African international locations however is simply licenced in 12, excluding Kenya.
The sluggish tempo of licencing in Kenya is a significant roadblock for fintechs seeking to set store within the East African nation.
Whereas the Central Financial institution of Kenya (CBK) has talked up authorized reforms to quick observe fintech licencing, excessive market entry limitations and evolving laws have derailed progress, which has allowed conventional gamers like industrial banks and telcos to stay dominant.
“We’re within the strategy of updating and amending the Funds Act, principally developing with a brand new act. We hope to have the ability to end that quickly and likewise the laws and that might information our manner ahead when it comes to funds service suppliers area,” Kamau Thugge, CBK governor, informed TechCabal in June.
“The CBK presently doesn’t have the capability for thorough due diligence earlier than issuing licences to a whole lot of fintechs which have arrange store in Kenya,” stated a fintech co-founder who requested to not be named.
The CBK didn’t instantly reply to a request for feedback.
This downside could possibly be mounted by licence passporting for established fintechs, based on Balsham.
“Licence passporting” is a regulatory mechanism that works as a passport for fintech firms. It permits them work in numerous international locations inside a area while not having separate licences for every.
Think about you might have a driver’s licence issued in Kenya. With “licence passporting”, you could possibly drive your automobile in different international locations in Japanese or Southern Africa with out making use of for a separate driving licence from every nation. No African nation has adopted licence passporting.
“If adopted, it might make it simpler for them to supply their companies throughout borders, which may result in decrease costs, higher merchandise, and extra decisions for purchasers,” one banking lawyer informed TechCabal.