Central Bank of Kenya Seeks Direct Executive Powers Under New National Payment System Bill

The Central Bank of Kenya and the National Treasury have prepared the National Payment System Bill, 2026, which introduces sweeping regulatory powers designed to reshape oversight of the country's rapidly growing financial technology and payments industry. Published to replace the older National Payment System Act of 2011, the draft legislation establishes a comprehensive framework aimed at strengthening consumer protection, ensuring market interoperability, and safeguarding broader financial stability across the East African economy. As transaction volumes and network interconnections scale dramatically, the proposed law provides the regulator with direct mechanisms to monitor compliance and manage institutional risk across all authorized participants in the financial sector.

The scope of the proposed oversight reflects the massive expansion of Kenya's digital finance ecosystem over the past decade and a half. According to market data cited in the legislative process, mobile-money subscriptions reached 54.01 million by June 2026. Furthermore, dominant infrastructure provider Safaricom processed 46.4 billion transactions worth KSh41.7 trillion through M-Pesa during the financial year ended March 2026. This immense volume of transactional flow necessitates a modern regulatory posture that moves beyond periodic reporting to active, on-the-ground supervision of both consumer-facing payment service providers and the underlying system operators that clear and settle transactions between financial institutions.

Under the terms of the draft Bill, authorized Central Bank officers would gain the legal authority to enter the premises of payment service providers and system operators with or without notice to inspect records, equipment, and accounts. The inspection regime extends downward to company agents and upward to parent companies through provisions for consolidated supervision. Personnel would face strict obligations to cooperate, answer questions, and supply requested information, with criminal offenses established for withholding assistance, providing false details, or obstructing regulators. Beyond routine audits, the framework draws a clear operational distinction between customer-facing service providers and the infrastructure operators that connect banks, merchants, and mobile wallets across the national network.

The most profound operational shift in the legislation lies in its crisis intervention and management tools. Should a provider fail to meet customer obligations, default on settlement commitments, or breach regulatory directives, the Central Bank would be empowered to take decisive control. Intervention mechanisms include appointing a statutory manager for an initial term of up to 12 months, ordering the removal of officers deemed responsible for institutional deterioration, appointing individuals to corporate boards, restricting new business acquisition, or revoking agent networks entirely. These powers position the regulator to act preemptively during systemic stress to protect customer deposits and maintain public confidence in the national monetary architecture.

Why This Matters

The legislative push by the Central Bank of Kenya highlights a critical evolutionary phase for African financial markets, where the sheer volume of digitally processed wealth requires state apparatuses to upgrade their supervisory capabilities. As mobile money transitions from a telecommunications-led innovation into foundational economic infrastructure, regulatory frameworks must adapt to prevent systemic vulnerabilities from cascading through interconnected banking and fintech networks. By securing statutory authority to remove executives and install managers, the regulator is establishing a direct governance backstop that treats payment system operators with the same prudential urgency historically reserved for commercial banks.

This regulatory tightening carries profound implications for investor confidence, currency risk management, and operational resilience across East Africa. Clear statutory powers provide a predictable legal mechanism for resolving distressed payment firms, thereby insulating the wider economy from liquidity shocks and systemic contagion. At the same time, the stringent compliance obligations and potential for unannounced inspections will compel operators to invest heavily in internal governance, risk management systems, and transparent data reporting. For institutional investors and regional fintech groups, the message is clear that regulatory compliance is no longer just a legal formality, but the primary determinant of operational survival.

Opportunities

• Compliance and Risk Consultancies: Advisory firms specializing in regulatory compliance can market specialized audit and readiness programs to help payment service providers align with expanded Central Bank inspection standards.
• Legal and Corporate Governance Specialists: Law practices and governance experts have a clear opening to advise payment system operators on restructuring leadership frameworks and managing statutory intervention protocols.
• Fintech Infrastructure Vendors: Technology vendors can pitch advanced data management and auditing software to help payment firms securely maintain and rapidly produce records demanded by regulators.
• Risk Management Financiers: Financial institutions can structure liquidity support and contingency credit facilities for payment providers navigating heightened regulatory capital and compliance expectations.

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