The Central Bank of Kenya has announced plans to introduce a new law aimed at regulating the fast-growing buy-now-pay-later industry, which has seen rapid adoption among consumers and merchants in recent years.
The proposed framework seeks to address concerns over consumer protection, credit risk, and market stability as more digital lenders and fintech firms enter the space.
The buy-now-pay-later model, which allows shoppers to purchase goods and services and pay for them in installments without traditional credit checks, has gained traction in Kenya, particularly in e-commerce, electronics, and household goods sectors.
However, the absence of clear regulation has raised questions about transparency in pricing, debt management, and potential exploitation of vulnerable consumers.
Under the planned legislation, providers of buy-now-pay-later services will be required to obtain operating licenses from the Central Bank and comply with strict disclosure rules.
This would include clearly informing customers of repayment schedules, applicable fees, and potential penalties for missed payments.
The law is also expected to introduce measures for assessing a borrower’s repayment ability before extending credit, in a bid to curb over-indebtedness.
The CBK noted that while the sector has boosted retail sales and expanded credit access, its unregulated growth poses risks similar to those seen in the early stages of digital lending.
With more Kenyans relying on deferred payment services, the regulator aims to ensure that financial innovation does not come at the expense of consumer welfare or economic stability.
Market players are expected to provide feedback on the draft proposal before it is tabled in Parliament for debate. Industry analysts believe that a well-structured regulatory framework could help formalize the buy-now-pay-later ecosystem, attract responsible investors, and foster sustainable growth.
If passed, the new law could be enacted as early as next year, reshaping the operations of one of Kenya’s fastest-growing financial services segments.
Written By Ian Maleve
