A regulatory sandbox is a testing environment, supervised by regulatory institutions, which allows companies to test their products and services in a controlled environment for the purpose of promoting innovation. Several countries have adopted the use of sandboxes to enhance the competitiveness of the Financial Technology (FinTech) industry and to facilitate the development of a fitting legal regulatory framework for regulating FinTech products in their jurisdictions.
The issuance of the Framework for Regulatory Sandbox Operations (the “Framework”) by the Central Bank of Nigeria (the “CBN”) on 12 January 2021 is, therefore, a significant development in Nigeria’s budding FinTech industry.
Scope of the Framework
The Framework provides for the operation of a sandbox dedicated to the Nigerian payment services system and is focused on promoting innovation in the design and delivery of products, services, or solutions that are either not contemplated under the extant laws and regulations or do not precisely align with the extant laws and regulations.
Notably, products or services previously rejected will be considered for sandbox trials on a case-by-case basis. However, products and services that are outrightly unlawful under the laws of the Federal Republic of Nigeria will not qualify for sandbox trials under the Framework.