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After years of rapid expansion driven by mobile money, Africa’s digital credit market is entering a regulatory phase. Governments across the continent are formalising loan apps through licensing and conduct standards to curb abuses without stalling access to credit.
Bonface Orucho, bird story agency
Regulators are reasserting control over Africa’s digital credit market that has expanded rapidly on the back of mobile money, thin oversight and unmet demand for bank lending.
What was once dominated by loosely governed loan apps is now being pulled into formal licensing regimes, as authorities attempt to preserve financial inclusion while curbing consumer harm.
The recalibration is unfolding against the backdrop of one of the world’s largest digital finance ecosystems.
According to GSMA data, Africa accounted for over 1.1 billion registered mobile money accounts in 2025, representing nearly three-quarters of global mobile money activity, with hundreds of millions of active users across the continent.
Reuben Mwatosya, the Chief Operating Officer at Tembo, a digital finance company based in Dar es Salaam, believes “this shift is from permissive growth to rule-based supervision.”
Mobile money’s scale has made digital credit ubiquitous. According to industry and development finance estimates, more than two billion mobile money accounts were registered globally by 2025, with Africa remaining the sector’s centre of gravity. That infrastructure has enabled app-based lenders to reach borrowers at a speed and scale that traditional banks never achieved.
Kenya has become one of the clearest test cases of how regulators are responding. Late last year, the Central Bank of Kenya licensed 42 additional digital credit providers, raising the total number of approved lenders to 195. The move marked another step in a regulatory process that began in 2022, when mandatory licensing was introduced following mounting complaints over predatory pricing, opaque terms and abusive debt collection practices.
According to the Central Bank of Kenya, the newly licensed firms met requirements on capital adequacy, data protection, governance and consumer disclosure. The approvals signal an effort to formalise a sector that had expanded faster than regulatory oversight, and to separate compliant operators from those operating outside the law.
The urgency is rooted in scale. According to central bank data, licensed digital lenders had issued about 6.6 million loans worth roughly KSh109.8 billion by November 2025. Other industry estimates suggest more than eight million Kenyans borrow each month digitally, underlining how deeply short-term app-based credit has been woven into everyday financial behaviour.
Smartphone loans further illustrate this scale. Initiatives like Safaricom’s Lipa Mdogo Mdogo in Kenya, or CRDB Bank and Vodacom’s programs in Tanzania, allow users to acquire 4G devices with minimal upfront payments and small daily instalments. These loans embed financial flows into daily life, enhance digital access, and increase the stakes for regulators as the sector grows beyond cash lending.
In a country with one of the world’s most mature mobile money systems, digital loans now routinely finance medical expenses, school fees and small business working capital. Daily digital lending flows running into hundreds of millions of shillings have made the sector systemically relevant, rather than peripheral.
Research cited by policymakers and development institutions shows that access to small, short-term digital loans can support income smoothing and employment. But regulators increasingly argue that these benefits depend on responsible lending practices, particularly as borrowers juggle multiple loans across platforms.
Kenya’s regulatory framework rests on the Central Bank of Kenya (Digital Credit Providers) Regulations, 2022, which require all non-deposit-taking digital lenders to obtain authorisation. The rules give the central bank powers to supervise pricing disclosures, restrict abusive recovery methods and enforce data protection standards.
According to the regulator, more than 800 firms applied for licences after the regulations came into force, underscoring both the size of the market and the extent of earlier regulatory gaps. The latest approvals suggest Kenya is moving beyond an initial clean-up phase toward a more stable, supervised digital credit market.
Similar recalibrations are underway elsewhere on the continent. In Nigeria, one of Africa’s largest economy, regulators spent much of 2025 tightening oversight of online lenders after years of complaints involving harassment, unauthorised data access and excessive charges. The Federal Competition and Consumer Protection Commission introduced new guidelines requiring mandatory registration and setting conduct rules on pricing transparency, data use and loan recovery.
According to the commission, dozens of digital lenders were instructed to regularise their operations or face enforcement action, signalling a move away from sporadic crackdowns toward structured supervision.
Ghana has followed a comparable path. In November 2025, the Bank of Ghana directed all digital credit service providers to apply for authorisation, formally bringing mobile loan apps under its financial regulatory perimeter. Licensing in Ghana is structured and risk-based, with requirements on capital adequacy, governance, and documented consumer protection frameworks. According to the central bank, these measures are designed to protect users while allowing innovation to continue, with phased deadlines for existing operators to comply.
In East Africa beyond Kenya, Uganda has adopted a more interim approach. In late 2025, industry associations working with regulators introduced a code of conduct banning loan shaming, hidden fees and aggressive recovery tactics. According to financial sector stakeholders, the code is intended to curb abuses while longer-term regulatory reforms are developed.
Taken together, these national efforts reflect a broader continental rethink.
According to Mwatosya, “Africa’s digital lending boom was initially fuelled by gaps in traditional banking, high mobile penetration and permissive regulatory environments.”
According to World Bank Global Findex data, mobile account ownership across Africa has risen sharply over the past decade, largely driven by mobile money.
The 2025 Global Findex shows that groups long excluded from the financial system, particularly women, are now increasingly connected. As of 2024, 73% of women in low- and middle-income economies held a financial account, a seven-percentage-point increase from 2021, according to the report.
However, as markets matured, however, consumer protection concerns increasingly outweighed the benefits of regulatory leniency. According to Mwatosya, while digital credit can support micro-entrepreneurship and consumption smoothing, it also raises risks of over-indebtedness when borrowers stack loans across multiple platforms.
“What distinguishes the current phase is its institutional character. Regulators are building licensing systems, compliance obligations and reporting frameworks that signal long-term commitment.”
“They are also scrutinising operators’ governance, capital, and consumer protection policies to ensure responsible conduct… With more countries aligning digital lending with central banking, competition and data protection regimes, responsible conduct is emerging as a prerequisite for growth.”
bird story agency
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