The National Treasury has intensified efforts to regulate digital lenders and protect Kenyans from exploitation in the fast-growing credit market.

Appearing before the Senate, Cabinet Secretary for the National Treasury and Economic Planning, John Mbadi, outlined new regulatory and policy measures aimed at ensuring fair and responsible lending.

He was responding to questions raised by Kisumu Senator Tom Ojienda through Bungoma Senator Wafula Wakoli.

Mbadi said the Central Bank of Kenya (CBK) now requires all Non-Deposit Taking Credit Providers (NDTCPs), commonly known as digital lenders, to be licensed under a Digital Credit Providers regulatory framework.

The framework sets eligibility requirements, governance standards, operational rules and clear consumer protection obligations.

“These measures ensure compliance with the law and, most importantly, protect customers’ interests and prevent rogue lenders from violating consumer rights,” Mbadi told Senators.

He added that the CBK is working closely with the Office of the Data Protection Commissioner (ODPC) to enforce data privacy standards.

All licensed NDTCPs must fully comply with the Data Protection Act. As part of the licensing process, providers must obtain a certificate from the ODPC and develop a detailed data protection policy.

“CBK requires all licensed NDTCPs to fully comply with the Data Protection Act. As part of licensing, providers must get a certificate from the ODPC and develop a robust data protection policy,” he said.

The policy must clearly explain how personal data is collected, processed, stored and protected, and must follow fair and transparent practices.

According to Mbadi, the licensing system has helped curb predatory practices such as high interest rates and unethical debt collection.

Mbadi also gave Senators an overview of the lending market. He said the CBK currently licenses 38 commercial banks, 14 microfinance banks and 195 NDTCPs. These institutions are regulated under the Banking Act, the Microfinance Act and the CBK Act.

As of December 2025, commercial banks had advanced Ksh 4,369.6 billion in credit, microfinance banks Ksh 32.7 billion and digital credit providers Ksh 110.5 billion. This represents 96.8 per cent, 0.8 per cent and 2.4 per cent of total credit in the economy, respectively.

Beyond digital lending, Mbadi updated the Senate on government efforts to reduce poverty and ease household hardship. He said Medium-Term Plans have prioritised direct social transfers and indirect measures such as lowering interest rates to stimulate economic activity.

“In December 2024, CBK reduced its benchmark rate from 13 per cent to 11.25 per cent. This led to a 1.4 per cent increase in credit to Ksh 7,140.3 billion by commercial banks and non-bank financial institutions,” he said.

He also highlighted progress in key social sectors, including education. Secondary school enrolment rose from 3.260 million in 2019 to 4.321 million in 2024, which he attributed to government policies, capitation grants and improved infrastructure.

On poverty levels, Mbadi cited the 2022 Kenya Continuous Household Survey, which placed national poverty at 39.8 per cent. Twenty-two counties have poverty rates above the national average, with Turkana, Mandera, Samburu, Garissa, Tana River, Marsabit, Wajir, West Pokot, Kitui, Isiolo, Elgeyo Marakwet, Busia and Kwale recording poverty levels above 50 per cent.

He said the government has introduced targeted programmes, including conditional grants and social protection initiatives, to support vulnerable communities. Revenue allocation considers poverty levels, population, land area, fiscal effort and equality, meaning poorer counties receive higher allocations.

“We are improving beneficiary identification using national databases, including the Single Registry, to reduce duplication and ensure support reaches the most vulnerable,” Mbadi stated.

The government is also expanding digital payments, strengthening monitoring and audits, and improving coordination between ministries and county governments. Citizens can report misuse or exclusion of funds and are expected to receive timely redress.