MUKUURA: Kenya’s remittance boom being held back by outdated licensing process

In 2024, remittances from the Kenyan diaspora reached approximately $4.95 billion (Sh638 billion), making them one of the country’s largest sources of foreign exchange, ahead of traditional sectors such as tea and tourism. The diaspora has increasingly been positioned as a key pillar of Kenya’s economic strategy.

 However, beneath this growth lies a structural constraint: the process of licensing the companies that facilitate these cross-border flows remains slow, opaque and largely manual.

At the centre of this issue is the Money Remittance Provider (MRP) licence, issued by the Central Bank of Kenya (CBK). This licence enables firms to legally move funds across borders and is therefore fundamental to the efficiency, cost and accessibility of remittance services. 

Where licensing functions efficiently, competition increases, transaction costs decline and consumers benefit from faster and more reliable services. Where it does not, delays and uncertainty are ultimately passed on to end users through higher fees and limited options.

The statutory minimum core capital requirement for an MRP licence is Sh20 million. While this reflects the need to safeguard a trust-based sector, its uniform application across different business models raises practical concerns. Smaller or corridor-specific operators, which may not present systemic risk, are subject to the same threshold as larger institutions. This has the effect of limiting market entry and slowing the pace of innovation. 

More significant, however, is the administrative reality of the licensing process itself. Industry participants routinely report timelines of 12 to 24 months, often without formal feedback during the review period. In a sector defined by digital speed and real-time transactions, such delays create uncertainty and raise the cost of market entry.

There is also limited transparency in how applications progress. Unlike other jurisdictions that have adopted digital portals to track regulatory submissions, Kenya’s process remains largely opaque, with applicants relying on manual follow-ups to establish the status of their files. This lack of visibility affects investor confidence and complicates capital planning.

If Kenya is to maintain its position as a regional fintech hub, there is a case for refining both the structure and administration of the MRP licensing framework.

First, a tiered approach to licensing could better align capital requirements with the scale and risk profile of different operators. This would allow smaller entrants to participate in specific corridors without undermining financial stability.

Second, the introduction of a digital application and tracking system would improve transparency and reduce reliance on informal processes. Real-time visibility of application status would enhance predictability for both local and international investors.

Third, clearly defined service timelines would provide greater certainty. A structured review framework, even if staged, would signal regulatory efficiency and support broader investment in the sector.