An Overview of the Central Bank of Nigeria Draft Framework for Regulatory Sandbox Operations

In response to the fast-evolving spate of global developments in the financial technology sector (Fintech), regulators across the world are constantly devising innovative approaches to keep up with the innovations. In recognition of the fact that innovation often precedes regulations, regulations are typically issued to establish a wholesome balance between market stability and consumer protection while making ample allowance for market innovation.

Understandably, erring on the side of caution, often leading to overregulation, Fintech startups face several regulatory challenges which may inhibit innovation. In recognition of the importance of Fintech innovation to the integrity and continuity of the financial system, the Central Bank of Nigeria (“CBN”) published an exposure draft framework for Regulatory Sandbox Operations (RSO) in Nigeria (the “Sandbox Framework”).

The Sandbox Framework aims to increase the potential for innovative business models that advance financial inclusion, reduce time-to-market for innovative products/services/models, increase competition, ensure adequate consumer protection.

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