In recent months, both Chipper Cash and Flutterwave have been making serious strides in the African fintech space, but the current growth of the startups has hit a major stumbling block in the form of the Central Bank of Kenya.
This as the country’s Central Bank has instructed all financial institutions to cease doing work with Chipper Cash and Flutterwave. The instruction came over the weekend and now threatens to limit the expansion of the startups.
The reason for the instruction stems from an administrative oversight it seems, with the Central Bank of Kenya noting that neither fintech is licensed to operate as a financial payments or remittance provider.
“It has come to the attention of the Central Bank of Kenya (CBK) that Flutterwave Payments Technology Limited and Chipper Technologies Kenya (Chipper) have been engaging in money remittance and payments services without licensing and authorization by CBK,” highlighted supervision deputy director, Matu Mugo, in a letter via TechCrunch.
“You are therefore directed to immediately cease and desist from dealing with Flutterwave and Chipper,” he added.
At the time of writing, Chipper Cash is yet to release an official statement on the matter, but Flutterwave has. In it, the fintech admits to not having a licence, but does point out that it has been working with partners in the region to negotiate that hurdle.
“Like many other financial technology service providers in Kenya, our entry into the market was through partnerships with banks and mobile network operators licensed by the Central Bank of Kenya,” the fintech explained.
“In 2019, as our operations grew, Flutterwave submitted its application for a Payment Service Provider licence. We have been in constant engagement with the Central Bank of Kenya to ensure that we provide all the requirements and we look forward to receiving our licence,” it clarified.
As such, it looks like the company will need to wait on the CBK to issue its licence if it plans to operate in Kenya once again, which is one of the continent’s largest economic hubs and therefore a key territory.
More importantly though, both fintechs will hope that this latest action does not spark further regulatory inquiry, especially as the likes of Chipper Cash operates in several other countries in Africa, including South Africa.
[Image – Photo by Amani Nation on Unsplash]
