Update on Regulation of Branchless Banking in Kenya
This update of CGAP’s 2007 "Notes on Regulation of Branchless Banking in Kenya" incorporates research conducted by CGAP in January 2010 regarding relevant legal and policy changes through the end of 2009. It is one of 11 country updates produced by CGAP as a part of the G20 Access through Innovation (ATI) Sub-Group’s workplan.
The paper states that Safaricom, a joint venture of the Kenyan government and Vodafone, pioneered branchless banking in Kenya with its M-PESA mobile-phone based payment service, launched in March 2007. M-PESA has achieved tremendous growth. However, when Safaricom and other providers’ ventured into branchless banking they encountered an absence of legislation governing payment systems, e-money, bank agents, consumer protection, anti-money laundering, and combating the financing of terrorism (AML/CFT). Recently, policy makers have demonstrated their interest in creating an enabling environment for branchless banking through legislative initiatives in banking, microfinance, payment systems, and AML/CFT. These initiatives include:
- 2008 regulation permitting microfinance deposit-taking institutions to use agents;
- 2009 amendment to the Banking Act that permits banks to appoint agents to take deposits and perform other activities;
- Passage by Parliament in late 2009 of an AML/CFT bill, which applies to both bank and nonbank institutions.
