The Bank of Ghana (BoG) has assured young innovators in financial and non-financial technology sector that every licensed or unlicensed innovation they enter into the recently launched Regulatory Sandbox is fully protected by oath.
The assurance comes on the back of concerns expressed by some Ghanaians on social media about how safe their unlicensed innovations are once they enter those innovations into the Regulatory Sandbox, which was launched recently. The concerns are that persons with the financial muscle might steal other people’s innovations and go to market with it.
TechGh24 directed the concerns to the BoG and got a response to the effect the central bank is a confidential institution, which holds much more sensitive secrets, so there is no way budding innovations and yet to be proven ideas will be leaked from BoG.
Indeed, every financial technology innovation on the Ghanaian market have was known to the regulator for a couple of months before it was launched, so the innovations in the Sandbox are also covered by the central bank’s oath of secrecy.
A Regulatory Sandbox is basically a system designed by the regulator that allows live, time-bound testing of both licensed and unlicensed innovations under the regulator’s oversight. So, even start-ups which cannot afford to raise the required initial capital and licensing fees, for instance, are all allowed to join the Sandbox and launch their innovations under specific regulations.
Free to join
Again, some Ghanaians have been seeking to know if there are some fees required for joining the Regulatory Sandbox, but the BoG has said that it is completely free to join because the Sandbox is its own tool.
Indeed, the financial requirement for licensing fintechs in Ghana are quite high and crippling for several young innovators.
From the central bank’s website it is clear that anyone seeking to establish a fintech firm should have between ghs800,000 and ghs20 million as initial/integrity capital, depending on the category of fintech; plus an addition processing and licensing fees of between ghs1,500 and ghs125,000.
But all those fees and initial capital requirements are waved for innovations which join the Regulatory Sandbox. However, being in the Sandbox is time-bound; so, each innovation has a limited time frame within which to raise money to fulfill their licensing obligations, vacate the Sandbox and launch fully.
The Bank of Ghana launched its Regulatory and Innovation Sandbox last Friday, following a successful pilot implementation of same.
It was developed in collaboration with EMTECH Solutions Inc, in line with the Bank’s commitment to continuously evolve a conducive regulatory environment that
fosters innovation, financial inclusion and financial stability.
Also Read: BoG includes blockchain-based digital services in SandBox programme
Background
A statement from the central bank said over the past two years and during the pilot, the use of digital financial services among Ghanaians has recorded remarkable increase on account of a raft of enabling policies introduced by the Bank and the Government of Ghana under the national digitalization agenda.
It noted the during that same period, Covid-19 restrictions have also driven the adoption of digital finance up, plus the emergence of several other industry technologies like blockchain, machine learning, artificial intelligence and and more.
Indeed, the central bank itself is currently piloting its own digital currency, the eCedi and has also inculcated blockchain into the regulatory sandbox during the pilot.
Functions
“Against the backdrop of these developments, the Regulatory Sandbox is an opportune tool for harnessing the potential of technology to develop an efficient and inclusive financial service industry without risking financial stability,” the statement said.
More importantly, it will serve as an enabling framework for small-scale, live testing of
innovations by innovators (operating under a special exemption, allowance, or other limited, time-bound exception) in a controlled environment under the regulator’s supervision.
According to BoG, the Sandbox aims at, among others, fostering a deeper understanding of innovative products, services and business models by the regulator, allowing for potential improvements to legal and regulatory requirements to encapsulate emerging technologies, and ensuring careful monitoring and containment of any risks that may emerge.
Eligibility
It said the Regulatory Sandbox is open to all licensed financial institutions (Banks, Specialized Deposit-taking Institutions, Payment Service Providers, Dedicated Electronic Money Issuers, Financial Holding companies and other Non-Bank Financial Institutions) and unlicensed FinTech start-ups that have innovative products, services or business models that meet the Regulatory Sandbox requirements.
Innovations eligible for the sandbox environment will have to satisfy any of the
following broad categories:
- New digital business models not covered explicitly or implicitly under any
current regulation; - New and immature digital financial service technology; and
- Innovative and disruptive digital financial service products that have the potential of addressing a persistent financial inclusion challenge.
How to get in
BoG said the Regulatory Sandbox Framework, user guide and access link to the platform can be found on its website to provide guidance and accessibility to interested licensed and unlicensed financial or non-financial institutions.
“Bank of Ghana through this initiative, affirms its commitment to provide the enabling environment for innovation to promote financial inclusion, and facilitate Ghana’s digitization and cash-lite agenda. With support from FSD Africa, we will engage various stakeholders including industry groups, associations and innovation hubs,” statement said.
