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Home Trending News

Nigeria gets its first Fintech Industry Sandbox

Jubril Agoro by Jubril Agoro
December 10, 2019
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Nigeria gets its first Fintech Industry Sandbox
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Financial services are a very important and delicate part of any economy. Consequently, there have been stiff regulations and high entry barriers into the fintech space, which have necessitated the introduction of a sandbox for developers and non-developers alike to test run their ideas.

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On Monday 9th December 2019, Financial Services Initiative (FSI) launched the first fintech industry innovation sandbox in Nigeria. It is an initiative that intends to support fintech entrants who have innovative ideas in financial services, with information and resources to start, succeed, and scale their businesses.

The initiative is supported by ₦250 million ($690,000) in multi-year grants from Flourish — a venture capital firm — and EFInA (Enhancing Financial Innovation and Access) with the intention of diminishing obstacles to innovation within the financial services ecosystem.

Chaired by former Andela and Flutterwave founder Iyinoluwa Aboyeji, the FSI — a non-profit — is backed by the Nigeria Inter-Bank Settlement System (NIBSS) and the Central Bank of Nigeria (CBN) and is set up to lower entry barriers into the fintech space with regard to regulation and licensing.

What is the sandbox and who can access it?

According to Aboyeji, the initiative will be open to all Nigerians irrespective of their locations with great ideas and a valid means of identification.

Speaking at the launch, Deputy Governor Operations, CBN, Adebisi Shonubi pointed out that the sandbox is a software testing platform where innovators can test run their ideas using the application programming interfaces (APIs) of existing companies, see what is possible, learn from mistakes, and make informed decisions.

“Whether you are a developer or even a student, as long as you have an innovative idea you can test it out within the safe environment of the sandbox.”

Beyond the APIs, Ameya Upadhyay — Principal, Investments at Flourish — believes that the sandbox is a platform for dialogue between innovators and regulators, and by extension, a boost for investor confidence.

According to Upadhyay, investors will be more willing to release funds when the founder has an idea of the required licences and APIs. With access to funds, individuals can apply for regulatory licences.

Aboyeji likens the sandbox to app stores like Google Playstore and the Apple Store where you can see who published what solution and decide if you want to partner or invest. The government can also decide to engage in meaningful conversation with the creator of any solution on the platform.

Presently, the sandbox has basic APIs from NIBSS which developers can use upon registration.

Similar instances

In most scenarios around the world, fintech sandboxes are set up by regulatory agencies to bridge the gap between regulatory compliance and the rapid innovation that takes place in the fintech space. Examples can be found in the UK, US, Australia, and Singapore, to mention a few.

Platforms like Google Playstore, Apple Store, and Amazon Web Services that allow developers to create solutions with their respective APIs could also be likened to sandboxes.

This initiative seems to be a significant step forward after the launch of Open Banking Nigeria in 2018, by Open Technology Foundation, a platform that seeks to harmonise the APIs of Nigerian banks and make them accessible to emerging fintech firms.

Considering that the innovation sandbox initiative has the backing of Nigeria’s apex bank, the hesitancy regulators and banks seemingly felt then might soon be a thing of the past. Also, Aboyeji believes that with the API of Nigeria’s switching provider (NIBSS) already secured, companies like banks and telcos will definitely tap into the innovation process in order to survive.

Source: techpoint.africa

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