The government of Zanzibar has created a blockchain sandbox program where innovative startups can experiment before upscaling.
- •The sandbox, branded the National Blockchain Sandbox, has been designed by LedgerFi IT solutions and is powered by XinFin Powering XDC network.
- •The initiative will not only help startup founders to test their technologies but also elevate Zanzibar as an ideal hub for innovation.
- •Startup founders will also safely test out their solutions within the National Blockchain Network, which has advanced encryption and multilayered security protocols
“The primary objective is to create a conducive environment for the development of cutting edge technologies including Blockchain, AI, and other emerging technologies,” Said Seif Said, Director General of the e-Government Authority of Zanzibar, said.
The Zanzibar government says it welcomes all interested startups to join the sandbox but it will prioritize startups that will offer digital solutions to financial inclusion, identity verification, and certification issuance. According to Seif, Zanzibar will wholly collaborate with startups that can help the country to achieve its digitization goals.
“Innovators will have the opportunities to work on pilot projects, collaborate with experts, and receive mentorship from industry leaders, which is very critical,” Seif added.
Those startups with broadly beneficial and impactful solutions will also qualify for training and incubator programs, empowering their technical capabilities. By garnering government support in driving their solutions, startups that join the network will become more competitive and possibly expand to other markets.
Pan-African founders looking forward to expanding into other continental markets have a difficult time identifying what strategies would work better in their new environments. Moreover, tackling compliance and regulatory approvals can be a herculean task.
The National Blockchain Network will act as a soft regulatory environment that will startups and innovators can tap into before encountering the harsh realities of the market; controlled creativity that allows startup founders to determine if their solutions need to be overhauled or altered in specific markets. African startups are not very fond of the continent’s regulatory environment.
The friction between the government and the private sector can be greased by sandboxes. Governments in the long run are able to match up their regulatory insight with the technological advances of innovators and startups are able to adapt to the realities of regulation, perhaps even appreciate its necessity.
With the reduced risks for startups in a sandbox comes an increase in venture capital funding. Investors are not singularly interested in the ambitiousness of a startup but also its capacity to function and scale up in a market.
According to a 2023 study research by Deloitte, startups which operate in sandboxes reduced their time-to-market by averagely 30%. These startups are compelled to iterate their products regularly and have a better survival rate in the market.
In August, the Bank of Tanzania (BoT) was lauded by startups and other stakeholders for its commitment to reduce regulatory burdens for financial startups in the country, after introducing a sandbox regulation framework for pilot innovators.