The Central Bank of Nigeria (CBN) is finalizing the frameworks to create a regulatory sandbox as part of its initiative to boost the adoption of financial services.
Nigeria embarked on a journey to promote cashless systems, in which fintechs play a central role. The country established a Financial Service Innovators association, which provides an ecosystem for innovations in the sector.
The country has made steps to promote access and innovations in finance. For instance, in 2012, the country created a Cashless Policy to curb the use of cash. Later, CBN launched a Bank Verification Number (BVN), which captured biometric details to curb fraud in Nigeria’s banking system. The two initiatives helped Fintechs increase access to finance.
The regulatory sandbox will be a step further, allowing fintechs to create solutions for social problems with minimal regulatory interference. Moreover, it will fulfill the CBN’s desire to give fintechs the lead in driving innovations in the sector.
“[it is] the desire of the bank is to see innovators taking a lead role in driving innovations by bridging the gap to address existing challenges,” Regtech quoted Musa Jinoh, the CBN’s Director for Digital Payment Systems.
In 2018, Kenya launched its sandbox, looking to give its fintechs an innovative playground free of restrictive rules. So far, 6 African Countries are developing similar models. Kenya and Sierra Leone have already implemented the sandboxes.