The Government has stepped up efforts to promote fair, transparent and responsible digital lending, with the National Treasury outlining a raft of regulatory and policy measures designed to shield Kenyans from exploitation and curb predatory practices in the fast growing credit market.

 

Appearing before the Senate, Cabinet Secretary for the National Treasury and Economic Planning, John Mbadi detailed the interventions in response to questions raised by Sen Prof Tom Ojienda (Kisumu) and posed on his behalf by Sen Wafula Wakoli (Bungoma).

 

Among the key safeguards, the CS said is a robust licensing and regulatory oversight regime led by the Central Bank of Kenya (CBK), which now requires all Non-Deposit Taking Credit Providers (NDTCPs) to be licensed under a Digital Credit Providers regulatory framework.

 

The framework sets out eligibility criteria, governance standards, operational requirements and consumer protection obligations aimed at cleaning up the sector.

 

“These measures have been introduced to ensure compliance with the law and most importantly to safeguard customers’ interests and prevent rogue lending institutions from infringing consumer rights,” Mr Mbadi told the House.

 

 

𝑇𝑖𝑔ℎ𝑡𝑒𝑟 𝑑𝑎𝑡𝑎 𝑝𝑟𝑜𝑡𝑒𝑐𝑡𝑖𝑜𝑛 𝑟𝑢𝑙𝑒𝑠

 

 

The CS revealed that the CBK is working closely with the Office of the Data Protection Commissioner to coordinate enforcement and ensure consistent application of data privacy standards across digital lenders.

 

“CBK requires all licensed NDTCPs to fully comply with the Data Protection Act and its Regulations. As part of the licensing and supervisory framework, NDTCPs must obtain a certificate issued under Section 19 of the Act from the ODPC as a pre-licensing condition and develop a robust data protection policy,” he said.

 

He added, “That policy must clearly set out how personal data is collected, processed, stored and protected and must align with lawful, fair and transparent practices under the Act.”

 

The licensing requirement, he said, has played a critical role in curbing predatory lending practices, including exorbitant interest rates and unethical debt recovery tactics by ensuring that only compliant entities operate in the market.

 

𝑆𝑛𝑎𝑝𝑠ℎ𝑜𝑡 𝑜𝑓 𝑡ℎ𝑒 𝑙𝑒𝑛𝑑𝑖𝑛𝑔 𝑚𝑎𝑟𝑘𝑒𝑡

 

Providing an update on the status of digital lending platforms, CS Mbadi noted that the CBK currently licenses three categories of institutions to lend to the public, 38 commercial banks, 14 microfinance banks and 195 non-deposit-taking credit providers, previously referred to as Digital Credit Providers.

 

Licensing and oversight are conducted under the Banking Act, the Microfinance Act and the CBK Act, all of which contain comprehensive provisions governing entry into and conduct within the financial sector.

 

“As of December 2025, credit to the private sector by commercial banks, microfinance banks and digital credit providers stood at Ksh 4,369.6 billion, Ksh 32.7 billion and Ksh 110.5 billion respectively,” the CS disclosed. “This represents 96.8 per cent, 0.8 per cent and 2.4 per cent of total credit advanced by these institutions.”

 

 

𝑃𝑜𝑣𝑒𝑟𝑡𝑦 𝑟𝑒𝑑𝑢𝑐𝑡𝑖𝑜𝑛 𝑝𝑟𝑜𝑔𝑟𝑎𝑚𝑚𝑒𝑠 𝑢𝑛𝑑𝑒𝑟 𝑟𝑒𝑣𝑖𝑒𝑤

 

 

In a separate response to Prof. Ojienda, the CS updated Senators on the implementation status of ongoing economic and social programmes aimed at reducing poverty and easing household hardship.

 

He said successive Medium-Term Plans have prioritised programmes targeting poverty both directly and indirectly. Direct interventions include social transfers, while indirect measures include policies such as interest rate reductions to stimulate economic activity.

 

Lower interest rates, he argued, improve access to credit for small and medium-sized enterprises (SMEs) and households, which in turn boosts incomes and economic growth.

“In December 2024, the CBK reduced its benchmark interest rate from 13.0 per cent to 11.25 per cent. This led to a 1.4 per cent increase in credit advanced by commercial banks and non-bank financial institutions to Ksh 7,140.3 billion as of December 2024, according to the Economic Survey 2025,” he said.

 

 

 

𝑮𝒂𝒊𝒏𝒔 𝒊𝒏 𝒆𝒅𝒖𝒄𝒂𝒕𝒊𝒐𝒏 𝒂𝒏𝒅 𝒔𝒐𝒄𝒊𝒂𝒍 𝒔𝒆𝒄𝒕𝒐𝒓𝒔

 

 

CS Mbadi highlighted measurable outcomes across several sectors, including social protection, economic empowerment, agriculture, health and education.

 

“Secondary school enrolment has recorded steady and significant growth over the years,” he said. “Numbers rose from 3.260 million learners in 2019 to 3.520 million in 2020, increasing further to 3.692 million in 2021 and 3.920 million in 2022. The upward trend continued in 2023 and 2024, reaching 4.109 million and 4.321 million learners respectively.”

 

He attributed the sustained growth to improved transition rates from primary to secondary school and ongoing government efforts to expand access through capitation grants, infrastructure development and retention-focused policies.

 

 

𝐶𝑜𝑢𝑛𝑡𝑖𝑒𝑠 ℎ𝑎𝑟𝑑𝑒𝑠𝑡 ℎ𝑖𝑡 𝑏𝑦 𝑝𝑜𝑣𝑒𝑟𝑡𝑦

 

 

On the question regarding regional disparities, the CS cited findings from the 2022 Kenya Continuous Household Survey which placed the national poverty rate at 39.8 per cent.

 

He revealed that 22 counties record poverty rates above the national average, with Turkana, Mandera, Samburu, Garissa, Tana River, Marsabit, Wajir, West Pokot, Kitui, Isiolo, Elgeyo Marakwet, Busia and Kwale reporting poverty levels exceeding 50 per cent.

 

Despite the stark disparities, the CS said the Government remains committed to eradicating poverty in all its forms and has rolled out targeted measures to support the most vulnerable regions.

 

 

𝐸𝑞𝑢𝑖𝑡𝑎𝑏𝑙𝑒 𝑟𝑒𝑣𝑒𝑛𝑢𝑒 𝑠ℎ𝑎𝑟𝑖𝑛𝑔 𝑎𝑛𝑑 𝑡𝑎𝑟𝑔𝑒𝑡𝑒𝑑 𝑔𝑟𝑎𝑛𝑡𝑠

 

 

Among the key measures is the application of the Equitable Share Allocation Formula, guided by the Commission on Revenue Allocation, to ensure that revenue shared among counties factors in poverty levels, population size, land area, fiscal effort and equal share considerations.

This approach enables poorer and marginalised counties to receive relatively higher allocations.

 

The Government is also providing conditional and targeted grants to strengthen service delivery in critical sectors such as health, urban development, road maintenance and basic services. Additional interventions according to CS Mbadi, include bolstering social protection programmes, enhancing economic productivity in Arid and Semi-Arid Lands (ASALs), promoting food security and nutrition initiatives and distributing relief food during drought periods.

 

He further noted that the State is promoting a vibrant and sustainable co-operative sector to drive economic transformation and improve livelihoods, while expanding transport infrastructure to unlock opportunities and improve connectivity across the country.

 

 

𝑆𝑡𝑟𝑒𝑛𝑔𝑡ℎ𝑒𝑛𝑖𝑛𝑔 𝑡𝑟𝑎𝑛𝑠𝑝𝑎𝑟𝑒𝑛𝑐𝑦 𝑎𝑛𝑑 𝑎𝑐𝑐𝑜𝑢𝑛𝑡𝑎𝑏𝑖𝑙𝑖𝑡𝑦

 

On concerns about effective targeting and transparency in poverty reduction programmes, the CS assured Senators that deliberate steps are being taken to ensure resources reach the intended beneficiaries.

 

“The Government is strengthening beneficiary identification and targeting through improved use of national databases, including the Single Registry, to reduce duplication, eliminate ineligible beneficiaries and ensure support reaches the most vulnerable households,” he said.

 

He added that transparency is being enhanced through expanded use of digital payment systems and strengthened programme management. Objective criteria such as poverty levels and vulnerability are being applied to guide equitable allocation of resources.

 

“We are reinforcing verification, monitoring and audit systems, including periodic beneficiary revalidation, enhanced internal controls and independent oversight, to curb leakages and improve value for money,” he said.

 

The CS also emphasised improved coordination across ministries, departments, agencies and county governments, alongside stronger grievance and complaints mechanisms to enable citizens to report exclusion errors or misuse of funds and receive timely redress.