Twelve Kenyan banks face an urgent need to raise approximately Sh11.85 billion in fresh capital by the end of 2025 or pursue mergers and acquisitions following Parliament's passage of a bill that would increase the minimum capital requirement tenfold to Sh10 billion over five years.
The affected banks, including Housing Finance Company, Access Bank Kenya, and Credit Bank, currently have core capital below the Sh3 billion threshold required by December 2025, with Consolidated Bank of Kenya facing the largest deficit of Sh3.68 billion based on its negative core capital of Sh683.31 million in September.
Central Bank of Kenya Governor Kamau Thugge anticipates a wave of mergers and acquisitions within the next five years, as 24 banks had core capital below the ultimate Sh10 billion requirement as of last year.
The gradual increase in minimum capital requirements - rising to Sh5 billion by 2026, Sh7 billion by 2027, Sh8 billion by 2028, and finally Sh10 billion by 2029 - aims to strengthen the sector's resilience and regional competitiveness.
Though the Kenya Bankers Association had advocated for an eight-year implementation period instead of five years, warning of potential disruptions to credit accessibility and sector-wide operations.
Elsewhere, Kenya Revenue Authority, KRA, collected Kshs 1.005 trillion by November 30, 2024, marking a 4.3% growth compared to the Kshs 963.746 billion collected in the same period last year.
Despite challenging economic conditions, including a slowed Purchasing Managers Index averaging 48.94 points and modest 1.0% growth in import values, Customs revenue has maintained strong performance with monthly collections exceeding Kshs 70 billion for four consecutive months.
The revenue collection shows mixed performance across sectors, with Customs revenue growing 5.9% to reach Kshs 359.571 billion and domestic taxes increasing 3.5% to Kshs 643.790 billion compared to the previous year.
KRA aims to collect Kshs 2.704 trillion by the end of the Financial Year 2024/2025, though challenges persist, including reduced domestic demand and government austerity measures affecting VATable goods consumption.
In other News, President William Ruto has launched Bridge Loan, a new Hustler Fund product that triples borrowing limits and extends repayment periods from 14 to 30 days for over two million borrowers.
The program maintains the 8% annual interest rate and introduces a one-month rollover option at 9.5% interest.
The President announced the enhancement during the fund's second anniversary, introducing a nine-category credit scoring system ranging from A1 (excellent) to C3 (poor creditworthiness).
Since its November 2022 launch, the fund has disbursed Sh60.5 billion to 24.7 million borrowers, achieving a 79.5% repayment rate (Sh48.1 billion), while Sh12.4 billion remains in default.
The initiative aims to help borrowers transition to formal credit markets by encouraging banks to use Hustler Fund repayment records for lending decisions.
Across the Boarder, The Bank of Tanzania (BOT) has announced the launch of its Fintech Regulatory Sandbox, opening applications from January 2-22, 2025, as part of its initiative to promote financial technologies and innovation through a controlled testing environment.
The sandbox, established under the Bank of Tanzania (Fintech Regulatory Sandbox) Regulations, 2024, aims to facilitate the testing of financial products and services that aren't fully covered by existing regulatory frameworks under BOT's mandate.
Applications will be accepted quarterly through the Bank's Fintech Regulatory Sandbox Application Portal (frsp.bot.go.tz), with evaluations based on regulatory requirements and responses provided within 30 working days after the application window closes.
The initiative, overseen by Deputy Governor Financial Stability and Deepening Sauda K. Msemo, targets banks, financial institutions, mobile money operators, electronic money issuers, and fintech companies, reflecting Tanzania's commitment to creating an enabling regulatory environment for financial innovation.
Elsewhere, Tanzanian ClickPesa has unveiled ClickPesa MFI, a digital platform designed to transform how microfinance institutions serve small businesses and women entrepreneurs.
The platform, launched after extensive market research involving 500 MFIs, combines digital loan management, automated payment workflows, and funding access to help microfinance institutions scale their operations and expand their reach to underserved business communities.
Drawing on insights from its payment services expertise since 2016, ClickPesa's new offering tackles core operational challenges faced by medium-sized MFIs, including cash flow management, payment digitalization, and data automation.
COO Richard Lema emphasizes that the platform goes beyond just technology, integrating with existing loan management systems while providing crucial access to funding that enables MFIs to grow their loan portfolios and better support small businesses and women-owned enterprises across Tanzania.
Still in East Africa, Stanbic Bank Uganda has appointed seasoned banking executive Mumba Kenneth Kalifungwa as its new Chief Executive Officer, effective March 1, 2025.
Kalifungwa, who currently serves as Managing Director of Absa Bank Uganda, brings nearly three decades of experience to the role, including 20 years in senior banking positions across Botswana, Zambia, and Uganda, where he has specialized in business development, risk management, and financial strategy.
The appointment follows a regulatory approval to fill the vacancy left by Anne Jjuuko's promotion to Eastern African regional Head of Global Markets for Standard Bank Group.
Kalifungwa's credentials include an MBA from Herriot Watt University and fellowships with prestigious accounting institutions, positioning him to lead Stanbic Bank's continued growth in Uganda's banking sector.
Meanwhile, South African online payment platform Peach Payments has expanded its payment options to include RCS cards through a partnership with RCS, a BNP Paribas subsidiary and major consumer finance provider.
The integration enables RCS cardholders to make online purchases across Peach Payments' merchant network, distinguishing itself from traditional store cards that often restrict online transactions, while giving merchants access to RCS's network of over 30,000 stores including major retailers like Game, Makro, Builders, and Pick n Pay.
The collaboration, announced by Peach Payments' head of partnerships Anine de Kock and RCS Digital Executive Jason Sive, aims to enhance customer experience by streamlining online purchases and providing greater payment flexibility.
Merchants can easily integrate RCS payment options through their existing Peach Payments dashboard, joining the platform's diverse payment methods including pay by bank, cards, QR codes, vouchers, buy-now-pay-later solutions, and digital wallets, positioning both companies to capture growing e-commerce opportunities in South Africa.
Finally, Nigerian Police Force is investigating freezing of 601 bank accounts linked to N21.2 billion ($21.2m) in unauthorized transactions that occurred during a technical glitch at Flutterwave, Africa's leading payment processing platform, in October 2023.
The breach, which affected 814 point-of-sale merchants, resulted in 9,633 erroneous transactions over two days, prompting Flutterwave to request account holds from Wema Bank and other financial institutions while pursuing legal action to recover the funds.
The investigation has gained momentum following arrests of suspects who reportedly confessed to exploiting the platform's vulnerability by transferring large sums to friends and relatives.
The police are now seeking a federal court order to freeze accounts across eight major banks, including Polaris Bank Ltd., Stanbic IBTC Holdings, and Standard Chartered Bank after their initial request for transaction reversals was denied by a judge who required input from all involved parties.