What happened

Former Central Bank of Kenya Governor Patrick Njoroge publicly challenged the open‑finance and competition rules embedded in the draft Payments Bill that is currently being debated in Parliament. In an interview with The Eastleigh Voice, Njoroge warned that the proposed provisions could undermine the stability of Kenya’s payments ecosystem and expose consumers to data‑privacy risks. He argued that the bill’s approach to data sharing among fintech firms lacks sufficient safeguards and could favour larger players at the expense of smaller innovators. Njoroge’s comments have sparked a fresh round of discussion among regulators, industry players and consumer groups ahead of the bill’s final reading. The debate now centres on whether the legislation balances innovation with protection for Kenyan users of digital financial services.

Context and background

Patrick Njoroge served as the Governor of the Central Bank of Kenya from 2015 until his retirement in 2023, overseeing a period of rapid digital transformation in the country’s financial sector. During his tenure, Kenya introduced the mobile money revolution, expanded electronic payments, and strengthened regulatory frameworks for fintech. After leaving office, Njoroge has remained an influential voice on monetary policy and financial stability, frequently commenting on legislative proposals that affect the sector.

The draft Payments Bill, first tabled in early 2024, seeks to modernise Kenya’s payment systems by introducing open‑finance principles, encouraging data sharing between banks, mobile money operators and emerging fintech platforms. The bill also includes competition clauses intended to prevent monopolistic behaviour and to promote a level playing field for new entrants. Proponents argue that open finance can spur innovation, improve financial inclusion, and give consumers more choice in managing their money. Critics, however, caution that without robust data‑protection standards, open finance could lead to breaches of personal information and create new avenues for fraud.

The Eastleigh Voice, a community‑focused media outlet serving Nairobi’s Eastleigh district, reported Njoroge’s concerns after a briefing with a coalition of small‑scale fintech firms. The coalition claims that the bill’s language on data sharing is vague, leaving room for larger banks and dominant mobile money operators to set terms that could marginalise smaller players. Njoroge echoed these points, emphasizing that any regulatory framework must preserve market competition while safeguarding consumer data. His intervention arrives at a critical juncture, as Parliament is expected to vote on the bill’s second reading within weeks.

Compared with what is normal

Kenya’s payments landscape has traditionally been characterised by a high degree of competition, driven largely by the dominance of mobile money services such as M‑Pesa, Airtel Money and T‑Kash. Historically, the sector has operated under a relatively light‑touch regulatory regime, with the Central Bank issuing guidelines rather than prescriptive rules on data sharing. The new draft represents a shift towards a more structured open‑finance environment, comparable to the European Union’s PSD2 framework, which mandates standardized APIs for data access.

• Current practice: Data sharing is largely voluntary and governed by bilateral agreements between banks and mobile money operators.
• Proposed bill: Introduces mandatory data‑sharing obligations for all licensed payment service providers.
• Historical competition: Over 30 fintech firms operate in Kenya, with market share distributed across banks, telcos and independent startups.
• Bill’s aim: To formalise competition rules that prevent any single entity from controlling more than 40 % of the market.

Why it matters

The debate over the Payments Bill has direct implications for Kenyan SMEs, consumers and the broader economy. For small businesses, open‑finance could simplify cash‑flow management by allowing seamless integration of bank accounts, mobile wallets and accounting software. However, if data‑privacy safeguards are weak, businesses risk exposing sensitive financial information to third parties, potentially leading to fraud or reputational damage. Consumers could benefit from more personalised financial products, yet they may also face increased risk of identity theft if their transaction data is not adequately protected. Moreover, the competition clauses could reshape the market structure: well‑capitalised banks might leverage the new rules to lock in smaller fintechs, reducing the diversity of services available to end‑users. Finally, the bill’s outcome will signal Kenya’s regulatory stance to international investors, influencing decisions on where to allocate capital in the fintech space.

Practical steps

• Review your current data‑sharing agreements with banks or mobile money providers and ensure they include clear clauses on consent and data protection.
• Conduct a basic risk assessment of how open‑finance APIs could affect your cash‑flow processes and identify any gaps in cybersecurity.
• Stay informed on the bill’s progress by following updates from the Parliament’s Finance Committee and reputable local media such as The Eastleigh Voice.
• If you are a fintech startup, consider joining industry associations that are lobbying for balanced regulations and stronger consumer safeguards.
• Educate your staff and customers on best practices for data privacy, including the use of strong passwords and two‑factor authentication.

Beavoren Ventures offers a Financial Management & Analysis service that can help SMEs navigate the evolving regulatory landscape, assess data‑privacy risks and optimise their payment processes in line with new legislation.

Talk to our team at Beavoren Ventures - info@beavorenventures.co.ke - to set up your systems correctly.

Disclaimer: This article is informational and does not constitute formal tax, audit or legal advice. For guidance specific to your circumstances, please contact Beavoren Ventures.