The Central Bank of Nigeria (the “CBN”) recently released the Draft Framework for Regulatory Sandbox Operations (“Draft Sandbox Regulations”). According to the CBN, the Sandbox Regulations is in recognition “of increasing consumer appetite for payment solutions and emerging disruptive technology in the financial services space” and the CBN’s desire “to ensure new and more flexible ways of engaging with the industry”. The Sandbox is expected to provide firms with a formal process to conduct live tests of new, innovative products, services, delivery channels, or business models in a controlled environment, with regulatory oversight.
The Draft Sandbox Regulations lists the objectives as follows:
- 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; and
- to provide an avenue for regulatory engagement with FinTech firms in the payment space, while contributing to economic growth.