The Central Bank of Nigeria (CBN) regulatory sandbox has gone live, the bank has announced.

#CBN's Regulatory Sandbox is LIVE!!

As an innovation-embracing financial institution, CBN is determined to support the development of new financial products and services that can improve how payment systems operate, mainly through digital channels. pic.twitter.com/mroqrjco39

— Central Bank of Nigeria (@cenbank) January 25, 2023

“As such, we invite participants in the financial system to submit Expressions of Interest to participate in the Regulatory Sandbox to explore novel applications of technology and innovation on behalf of our customers and stakeholders,” the bank said in a tweet thread.

According to CBN, the Regulatory Sandbox is 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.

The CBN’s Sandbox aims to boost innovation, increase financial accessibility, and protect consumers, all while offering a means of communication with fintech firms in the payments sector.

The Sandbox application process is open to both existing CBN licensees (financial institutions with fintech initiatives) and other non-regulated technology companies intending to test innovative financial solutions, products, or services deemed acceptable by the CBN.

However, the bank is more concerned with applications of novel technologies not covered by law.

“Innovative financial service/products deemed acceptable by the CBN and tests proposing non-regulated financial products and services using emerging technologies, i.e., Innovators whose proposed solution involves technologies which are currently not covered under existing CBN regulations. Tests are limited to payment products and services.”

Among the criteria for acceptance include being an innovative product or service with clear potential to:

1. Improve accessibility, customer choices, efficiency, security and quality in the provision of financial services; or
2. Enhance the efficiency and effectiveness of Nigerian financial institutions management of risks; or
3. Address gaps in or open up new opportunities for financial benefits or investments in the Nigerian economy

The applicant should submit an application form along with all complete information and relevant details. Prior to submitting an application, the applicant can seek clarification regarding the sandbox by writing a mail to [email protected]

The CBN’s sandbox was initiated in 2021 with the publication of the Framework for Regulatory Sandbox Operations.

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The Saccos Societies Regulatory Authority (SASRA) has published a full list of all the licensed SACCOs in Kenya.

The list includes:

• 176 licensed deposit-taking SACCOs
• 183 authorized non-withdrawals deposit SACCOs

The SACCO Societies Regulatory Authority (SASRA) is the government’s principal agency responsible for the supervision and regulation of SACCO Societies in Kenya. It is established pursuant to the provisions the Sacco Societies Act, No.14 of 2008. The Authority’s principal responsibility is to license SACCO Societies to undertake Deposit Taking Business in Kenya (FOSA) and to Supervise and regulate both Deposit Taking and Specified Non -Deposit Taking SACCO Societies.

The Authority falls within the State Department of Cooperatives under the Ministry of Cooperatives and Micro, Small and Medium Enterprise(MSME) Development.

The list of licensed SACCOs comes following the announcement that SACCOs are set to join the National Payment System (NPS) of Kenya allowing them to clear cheques and begin lending to one another in a bid to lower the cost of credit.

The move, spearheaded by Kenyan President, William Ruto, seeks to expand financial inclusion by reducing SACCOs over-reliance on banks for funding and other commercial services such as cheque issuance and processing.

Currently, SACCOs in Kenya rely on banks for the following:

• Issuing of cheque books
• Processing of personal cheques
• Trade finance services
• Treasury management
• Electronic funds transfer (EFTs)
• Real-time gross settlements (RTGS)

Banks are expected to take a hit on their loan books as SACCOs begin lending to each other through the Central Liqudity Facility (CLF), which is an equivalent of the inter-bank market.

“It is something that the saccos have really pushed and we are hoping the new government can actualise that vision,” said SASRA Chief Executive, Peter Njuguna.

The government is set to establish a KES 1 billion ($8.3 million) Central Liqudity Facility (CLF) for SACCOs in about one year in a bid to ease access to financial services and thus deepen inclusion.

So far, 50 out of the 890 SACCOs have committed to facility establishment with more expected to be admitted.

Recently, Kwara, a Kenyan fintech, announced a partnership with KUSCCO, the national umbrella body representing over 4,000 SACCOs in Kenya to provide software solutions that help digitize a lot of the SACCO activities. The startup secured $3 million following the announcement.

The SACCO sub-sector contributes close to 7% of the Kenyan GDP.

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