The Central Bank of Nigeria’s regulatory sandbox is live, according to a tweet from the bank’s official Twitter page. Nigeria’s financial technology space is possibly its most regulated sector, and the result is that the barrier to entry is often high for new entrants. However, the CBN’s regulatory sandbox is expected to solve some of these challenges, providing startups with a way to test innovative ideas in a secure environment with guidance from the CBN.
Companies with an existing CBN license and other technology companies with innovative financial solutions are encouraged to apply.
However, eligible solutions must improve access to financial services and the customer experience, among other criteria. Work on the CBN sandbox began in 2021 with the publication of the Framework for Regulatory Sandbox Operations.
With low financial inclusion levels across the continent, many Central Banks have moved to launch regulatory sandboxes as part of moves to foster interactions with players in the fintech space. In addition to Nigeria, the Bank of Ghana launched its regulatory sandbox in 2022.
Other African countries like Mauritius, Kenya, and Mozambique have also launched sandboxes. Like Ghana, the CBN has partnered with Emtech, a startup that provides digital infrastructure for central banks.
According to the CBN’s Framework for Regulatory Sandbox Operations, some of the sandbox’s objectives include reducing the time-to-market for products, increasing competition, and fostering engagement between the CBN and fintech startups. While the sandbox aims to provide an environment for businesses with innovative solutions to test the validity of their solutions, it will not be providing funding for any of the participating companies.