Fintechs expanding between Kenya and Rwanda may soon need one licence

Kenya and Rwanda are preparing a framework that would allow digital payments companies licenced in one country to operate in the other without seeking fresh regulatory approval, a move that could ease cross-border expansion for fintechs across East Africa.

On Wednesday, the Central Bank of Kenya (CBK) and the National Bank of Rwanda (NBR) signed a memorandum of understanding to develop a licence passporting framework for payment service providers, allowing regulators to recognise each other’s licencing regimes and coordinate supervision.

The plan tackles a long-standing barrier: fintech companies expanding across borders must apply for separate licences in each market, even where requirements are similar, slowing expansion and raising compliance costs.

Under the proposed framework, a payment fintech licenced in Kenya could expand to Rwanda without requiring a new licence. Regulators would still oversee companies operating in their markets while coordinating supervision.

“The Licence Passporting Framework will represent an important step towards addressing the challenge of duplicative regulatory processes despite substantial similarities in requirements,” the CBK said in a statement. 

If implemented, the passporting framework could shorten the time it takes payment companies to enter neighbouring markets and expand their merchant networks, while giving regulators a coordinated way to supervise firms operating across both jurisdictions.

The initiative is part of the East African Community Cross Border Payment System Masterplan, which plans to connect payment systems across the region and ease digital transactions between partner states. The plan calls for mutual recognition of payment licences to reduce regulatory fragmentation that has slowed cross-border payment services.

Kenya is a major hub for digital payments in East Africa. Safaricom’s M-PESA platform has more than 40 million users in the country and processes transactions worth trillions of shillings each year, forming the backbone of Kenya’s mobile money economy.

The country has also become a base for a growing number of fintech firms offering merchant payments, remittance services and financial infrastructure products that support banks, mobile money operators and online businesses.

Rwanda has pursued a strategy of positioning itself as a regional technology and financial services hub. Authorities have pushed regulatory reforms and the adoption of digital payments as part of efforts to attract fintech companies and strengthen the country’s financial sector.

The two regulators said closer coordination between national authorities is needed as digital payment providers expand across borders and regional trade grows.

Policymakers across the East African Community have long argued that fragmented payment systems slow regional commerce. Kenya and Rwanda’s agreement signals an early step toward building a more connected digital payments market in the region.