The Central Bank of Kenya (CBK) has rolled out draft regulations that will significantly reshape the country’s credit guarantee sector. In a notice issued Thursday, the regulator directed that all entities offering credit guarantee services must either register or obtain a license to continue operating legally.
The move follows the recent amendment of the CBK Act through the Business Laws (Amendment) Act, 2024, which formally introduced a framework to regulate and supervise credit guarantee businesses. CBK says the changes are aimed at strengthening oversight of the fast-growing sector, which plays a vital role in supporting access to affordable credit for Micro, Small, and Medium Enterprises (MSMEs).
What the New Rules Mean
Under the proposed framework, registered providers will be required to meet minimum operational standards, while licensed guarantors will face stricter requirements similar to banks and other regulated financial institutions. These include clear governance structures, risk management systems, and regular reporting obligations.
Entities already engaged in credit guarantee activities have been given a five-year transition period to comply. After this window closes, unregistered or unlicensed providers will be declared non-compliant and may face regulatory penalties.
CBK has made the draft regulations available on its official website and invited the public to submit feedback via its online platform. Comments must be submitted by October 15, 2025.
Boosting Financial Inclusion
Alongside the new licensing framework, CBK is also developing the National Financial Inclusion Strategy (NFIS 2025–2028) in collaboration with public and private sector stakeholders. The strategy seeks to harmonize financial inclusion initiatives, reduce policy fragmentation, and create synergies among players in the sector.
According to CBK, ensuring that credit guarantee providers operate within clear legal boundaries will enhance trust in the system, promote sustainable lending, and further consolidate gains in Kenya’s financial inclusion journey.
