3 February 2023

The Central Bank Of Nigeria – Regulatory Sandbox

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The Central Bank of Nigeria (CBN) is Nigeria's primary financial regulator, and it has issued a call for expressions of interest from innovators to take part in its Regulatory Sandbox...
Nigeria Finance and Banking
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The Central Bank of Nigeria (CBN) is Nigeria's primary financial regulator, and it has issued a call for expressions of interest from innovators to take part in its Regulatory Sandbox (the "Sandbox") in line with its Framework for Regulatory Sandbox Operations.

What is the CBN Regulatory Sandbox?

The Regulatory Sandbox is a platform created by the CBN for companies to conduct live tests of new, innovative products, services, delivery channels, or business models in a controlled environment, with regulatory oversight.

The platform provides all the necessary information to support and facilitate innovation within the Nigerian Financial Space and any company within this industry, with an innovative financial solution, including app developers, startups, digital lenders, and financial technology suppliers, may apply to the Sandbox.

What is the objective and Scope of the Sandbox?

While the purpose of the Sandbox is to help find and promote new ideas that might improve the development and distribution of Nigeria's banking and payment services, other companies providing non-regulated financial products and services using emerging technologies are also allowed to participate in this Sandbox. As such, innovators whose proposed solution involves technologies which are currently not covered under existing CBN regulations can be registered

The ultimate goal is to do a number of things, including improving service quality, enriching the customer experience, and promoting financial inclusion. Innovating financial services, products, and/or solutions are welcome in the sandbox.

Who is qualified to apply?

Applications to the Sandbox are welcome from any organization focused on offering novel approaches to the carrying out business in Nigeria. These include digital lenders, app developers, startups, financial technology suppliers. Current CBN licensees are encouraged to apply as well. Below are highlighted criteria for eligibility:

  • The product, service or solution is innovative with clear potential(s) 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
  • applicants will provide the proposed project within a limited transaction (value and volume) for better risk management and mitigation. The limits shall not be exceeded during the testing period.
  • The applicant has conducted an adequate and appropriate assessment to demonstrate the usefulness and functionality of the product, service or solution and identified the associated risks which should be devoid of adverse effect to existing structures and consumer experience.
  • The applicant has the necessary resources to support testing in the sandbox. This includes the required resources and expertise to mitigate and control potential risks and losses arising from offering of the product, service or solution; and
  • The applicant should have a business plan to show that the product, service or solution can be successfully deployed after exit from the sandbox.

What is the registration and submission procedure?

Interested applicants are required to use this link to register and fill out the application form as well as upload relevant documents. We would like to remind applicants that supplying inaccurate or misleading information during the application process may result in the application being denied, the registration procedure being canceled, and/or additional regulatory proceedings.

There are four steps to the application process, which we've outlined below:

  • Application stage: Fill out the application form: The innovator must submit an application;
  • Review stage: The review of the application will depend on how complete it is;
  • Evaluation stage: The application will be judged based on certain criteria to see if it fits well in the Regulatory Sandbox;
  • Approval stage: the innovator will be informed of their approval, and preliminary engagement will begin;

Those who apply and have their forms submitted successfully will be notified within 60 business days following the closing date. Approved applications will be given a Letter of Approval (LoA) once accepted into the Sandbox, participants will then be authorized to put their innovations to the test.

When applying to the Sandbox, keep in mind that the CBN has the right to use or reject any information you provide for internal purposes. In addition, the CBN will collect, use, store, and transmit any information you give in connection with the Regulatory Sandbox in line with its Privacy Policy, which may be seen here.

The deadline for application into the CBN Regulatory Sandbox is February 1, 2023.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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