Kenyan court bars unlicensed digital lenders from enforcing loans in court
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On July 17, Nairobi Resident Magistrate Gladys Kiama dismissed two loan recovery suits filed by unlicensed digital lenders Tri-State Capital Limited and Mombo iCapital Limited, ruling they lacked legal capacity to enforce loan agreements without a Central Bank of Kenya digital credit provider licence. In the first case, Tri-State sought KES 500,000 (about USD 3,858) from Geoffrey Mucuku over a KES 213,500 loan secured by a vehicle that had grown due to default interest. In the second, Mombo iCapital sought KES 162,297 (about USD 1,252) from Florence Wawira over a KES 65,000 loan issued in 2025 that grew with interest and weekly default charges. The magistrate cited Section 3 of Kenya's Banking Act, stating that conducting lending business without the required licence is illegal and undermines the policy goals of Kenya’s financial regulatory framework. The rulings suggest that unlicensed fintech lenders may struggle to recover loans through Kenyan courts, increasing the commercial risk of operating without CBK approval. Since licensing began in 2022, the CBK has approved 252 digital credit providers from over 800 applications, leaving many applicants awaiting approval or operating outside regulation.
For Nigerians, this highlights the regulatory risk faced by unlicensed digital lenders operating across borders and may signal a trend that Nigerian regulators could watch when considering enforcement of licensing requirements for fintech lenders. If you operate or invest in digital lending in Kenya, ensure you hold a valid CBK licence before pursuing loan recoveries in court.