Kenyan President Uhuru Kenyatta signed the Data Protection and Privacy Bill into law on 8 November. The new law imposes restrictions on data handling and sharing by individuals, corporations, and public agencies, based on the principles of the European Union's General Data Protection Regulation. Compliance with the law's requirements will be overseen by a newly created independent Data Protection Commission, with violations punishable with fines of up to USD29,000, alongside the scope to impose prison sentences of up to two years.

Concerns among the general public regarding personal data protection have increased over the past year, particularly over the government's attempt to register citizens' biometric data, known as 'Huduma Namba' and mobile money lenders accessing user data to facilitate high interest-rate lending practices.

Significance

IHS Markit assesses that the new law is part of a government-led effort to impose more-stringent regulation on mobile money lenders that charge high rates of interest for short-term loans. The government is likely to have moved to regulate this sector to counterbalance adverse political consequences from its recent controversial repeal of a cap on banking-sector commercial interest rates, which had been widely viewed as offering the public protection against high interest rates.

The Data Protection and Privacy Bill has not yet been made public, but if it provides scope for significant exclusions on grounds of public security or national interest, these are likely to be poorly defined, weakening the effective of its regulatory control. Regardless, further regulation of the mobile money lending sector is highly likely, indicated by moves to advance a draft bill to place such companies under the regulatory purview of the Central Bank of Kenya (CBK), alongside its supervision of commercial banks. IHS Markit assesses that this bill is likely to be passed within one year, with momentum supporting the bill being indicated by statements of concern regarding mobile money lenders coming from senior government officials, including CBK governor Patrick Njoroge.

Posted 21 November 2019 by William Farmer, Analyst, Sub-Saharan Africa, Country Risk, S&P Global