2025/04/21 by Radha Upadhyaya, Keren Weitzberg, Linda Bonyo · 1 voice
Business, Management and Accounting · Economics, Econometrics and Finance · Social Sciences · #Digital Economy and Work Transformation #FinTech, Crowdfunding, Digital Finance #Microfinance and Financial Inclusion
paper · pdf · doi:10.1017/fas.2025.4
openalex publication_date 2025/04/21 · openalex created_date 2025/10/10 · openalex updated_date 2026/05/21
Abstract Digital credit – short-term microcredit distributed over a digital platform, such as a mobile phone – has become hugely popular in Kenya, with over six million Kenyans having taken out at least one digital loan over the last decade. While there is a small but growing body of literature on the problems associated with digital credit (such as its high costs and contributions to over-indebtedness), far less attention has been paid to the regulatory debates in Kenya or elsewhere. This article charts the rise of digital credit in Kenya and the process of regulating the sector, which culminated in the CBK (Amendment) Act, 2021. Due to its almost exclusive focus on previously unregulated lenders, the Act had limited efficacy: it did not affect most of the digital lending market, which is largely controlled by partnerships between banks and mobile network operators. Using concepts from business power theory, we argue that the shape of the legislation can be attributed to the market-led ideology of the Kenyan government and the structural power of the telecommunications giant Safaricom and its partner banks. This case provides important lessons for other countries, where fintechs in general and digital credit, in particular, are on the rise.