https://new.kenyalaw.org/akn/ke/judgment/scc/2026/59

Waithaka t/a Genesis Micro Network v Kithia (Claim E105544 of 2025) [2026] SCC 59 (KLR) (3 July 2026) (Judgment) Neutral citation: [2026] SCC 59 (KLR) Republic of Kenya In the Milimani Small Claims Court Claim E105544 of 2025 GW Kiamah, RM July 3, 2026 Between Charles Kamwaro Waithaka t/a Genesis Micro Network Claimant and Liz Makena Kithia Respondent Judgment 1.The claimant instituted this claim vide the statement of claim dated 24/10/2025 seeking judgment against the respondent for Kshs. 1 million on the basis he loaned the respondent Kshs. 700,000/= in two different instalments at a monthly interest rate of 10% and the same was repayable over eleven months. That the total repayable amount was Kshs. 1,050,000/=. That the respondent issued two separate cheques one of which was returned unpaid whilst the other was not deposited as the account lacked funds. As such, the claimant sought the funds. 2.Before delving into the merits of the case, I have considered the court record and note that the claimant is not licensed as a digital credit lender by CBK. Section 3 of the Banking Act (Cap 488) requires all persons or entities carrying out banking or financial business in Kenya to be licensed by the Central Bank of Kenya. It then follows that conducting lending business without such licensing amounts to an illegality and economic risk. 3.The rationale for such regulation is to protect members of the public from unregulated lending practices and to ensure that entities engaged in the business of advancing credit operate within the confines of the law. A party who undertakes regulated financial activities without the requisite authorization cannot invoke the aid of the Court to enforce rights arising from such unlawful activities. 4.I say so relying on the case of Rei-Iman v Succeed Capital Limited (Civil Appeal E1374 of 2024) [2025] KEHC 19316 (KLR) (Civ) the Court held that: -“Allowing an unlicenced person to conduct businesses like banks would be against public policy, and this court has a duty to ensure that such does not happen. The upshot of the forgoing is that the suit that was led by the respondent in the lower court was a nonstarter since the Respondent lacked the legal capacity to sue.” 5.Applying that principle to the present case, I find that the claimant has not demonstrated that he possesses the legal capacity and regulatory authority necessary to engage in the lending activities disclosed in the statement of claim. Consequently, the claimant lacks the requisite standing to seek enforcement of the impugned lending arrangement before this Court. 6.In the circumstances, it becomes unnecessary to consider the merits of the claim, the alleged default, the dishonoured cheques, or the amount claimed. 7.As such, the claimant lacks the locus standi to institute or file a suit or in any way engage the court for redress. 8.The upshot is that the claim is hereby struck out with no orders as to costs. It is so decreed. DATED AND DELIVERED AT NAIROBI VIA CTS THIS 3RD DAY OF JULY 2026HON. GLADYS .W. KIAMAHRESIDENT MAGISTRATE/ADJUDICATOR