The Central Bank of Kenya (CBK) is mulling over a strategy to regulate mobile money lenders who have flooded the local market.
Speaking at the Afro-Asia Fintech Festival in Nairobi, CBK Governor Patrick Njoroge said independent mobile money lenders who churn out micro loans to individuals and companies could be a conduit for money laundering.
"Of course you do not know where they get their money from. Money laundering and (the) financing of terrorism are concerns. This could be a standard money laundering operation and you will never know," he said.
A report by FSD Kenya puts the number of mobile money lenders locally at 49, with over six million Kenyans having secured micro loans with institutions.
"They maybe many in terms of numbers, but that's not the best measure. The best measure is 'how big are they relatively to other institutions'?" said Njoroge. "In that sense they are less than one percent, in terms of lending. These are rough estimates ... but we sense they are not large compared to commercial banks."
He added: "We need to deal with issues early when they are emerging so that you can have an effective transition to something that is more sustainable."
Njoroge also referenced cyber security challenges with protecting customer information. "This is unregulated because there is no such law today," he added.
The CBK has published cyber security guidelines for the payment service providers in Kenya to ensure that systems do not fall victim to cyber fraud.
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