Earlier this week, the Central Bank of Nigeria (CBN) unveiled the regulatory framework for sandbox operations that will help control how new tech-based financial products/services are launched into the Nigerian market.
In a 16-paged circular that was sent to all deposit money banks and fintech firms (especially those offering mobile money and payments services), the CBN explained that the regulatory sandbox will serve as “a formal process for firms to conduct live tests of new, innovative products, services, delivery channels, or business models in a controlled environment, with regulatory oversight subject to appropriate conditions and safeguards.”
This is also intended to make it possible for the apex bank to adequately keep up with the latest innovations by banks and fintechs, whilst ultimately engendering a reliable, safe, and efficient payment system in the country. See the full breakdown of the regulatory sandbox operation below:
- To increase the potential for innovative business models that advance financial inclusion
- To reduce time-to-market for innovative products, services, and business models
- To increase competition, widen consumers’ choice and lower costs
- To ensure appropriate consumer protection safeguards in innovative products;
- To clearly define the roles and responsibilities of stakeholders and the operations of the Sandbox for the Nigerian Payments System industry
- To ensure adequate provisions in regulations to create an enabling environment for innovation without compromising on safety for consumers and the overall payments system
- To provide an avenue for regulatory engagement with fintech firms in the payment space, while contributing to economic growth.
Based on the last objective above, it can be seen that this is yet another major step the Central Bank of Nigeria has taken towards regulating the Nigerian fintech space. Back in 2018, the apex bank had taken a major step by announcing the minimum capital for mobile money operators in Nigeria. Now, it is set to regulate how new products and services are launched by mobile money operators and digital payment service providers.