The National Treasury and the Central Bank of Kenya (CBK) have moved to close a long-standing loophole in the country’s digital financial system.
Under a landmark proposal being finalized for a 2026 rollout, the Kenya Deposit Insurance Corporation (KDIC) will extend mandatory insurance coverage to mobile money balances held on platforms like M-Pesa, Airtel Money, and T-Kash.
Currently, while banks protect individual deposits up to KSh 500,000, mobile money users are only protected “indirectly” through pooled trust accounts a structure experts warn could leave millions in limbo if a partner bank collapses.
Current Gap: “Pooled Account” Problem
For years, mobile money operators have stored customer funds in Trust Accounts within commercial banks. However, under current KDIC laws, the insurance cover applies to the Trust as a single entity, not to the millions of individuals whose money is inside that trust.
“If a bank holding KSh 10 billion in M-Pesa trust funds fails today, the current law only guarantees a payout of KSh 500,000 for the entire pool,” says a financial analyst at the CBK. “The new framework will treat every mobile money user as an individual depositor.
What the New Framework Means for You
The proposed KDIC Mobile Money Amendment aims to align digital wallets with traditional banking standards.
Key Features of the 2026 Proposal:
- Individual Coverage: Every registered mobile money user will be insured up to KSh 500,000.
- Automatic Protection: Users will not need to register or pay any fees for this cover; it will be statutory.
- Direct Recourse: In the event of a bank or operator failure, users can claim their specific balance directly through the KDIC portal.
| Feature | Current Status (2025) | Proposed Reform (2026) | | Insured Party | The Trust Account (Pooled) | The Individual User | | Protection Limit | KSh 500,000 (Per Trust) | KSh 500,000 (Per User) | | Primary Regulator | CBK (National Payments Act) | KDIC & CBK (Joint Oversight) | | Payout Source | Bank Liquidation Proceeds | KDIC Deposit Insurance Fund |
Strengthening the “Fintech Backbone”
With mobile money transactions hitting KSh 8.69 trillion in 2024, the move is seen as vital for national economic stability.
By insuring these deposits, the government aims to encourage more Kenyans to use mobile wallets as formal savings tools, further driving the National Financial Inclusion Strategy (2025-2028) launched earlier this month.
Next Steps: 2026 Consultations
KDIC and CBK are expected to hold public participation forums throughout the first half of 2026. A key area of debate will be the premium contributions—whether mobile network operators (Safaricom, Airtel, Telkom) should pay the insurance premiums or if the banks holding the funds should bear the cost.
