In the recently released Monetary Policy Statement, the Reserve Bank of Zimbabwe (RBZ) finally gave a commencement date for the Fintech Regulatory Sandbox.
“The Fintech Regulatory Sandbox which will be housed at the Bank will
be open for financial innovation with effect from 1st March 2021. The
Regulatory Sandbox guidelines are being finalised and will be accessed
from the Bank’s website.”
The Fintech Sandbox is a way of giving the spring of Fintech businesses a presence (to use the term loosely) in the nation’s economy. Back in 2019, the RBZ announced the aforementioned initiative to be the start of incorporating fintech and the technologies it brought into the fold.
As we are all aware Zimbabwe is not the most conventional economy and likewise innovation to meet those unique challenges, wittingly or otherwise, goes beyond what the current regulations can account for. An example of this is Golix which tried to broaden opportunities in the cashless late 2010s by offering, among many things, an ATM that facilitated cryptocurrency transactions.
This sort of innovation was not met with open arms by the regulator and the company was ostracized by financial institutions and then told to shut up shop altogether. Golix is an example of the kind of innovation that bodies like the RBZ cannot factor in due to the fact that they are leaps and bounds beyond what the current system is built for.
The fintech sandbox will look to first eliminating the barrier that exists between fintech startups have with financial institutions.
“The framework will outline the qualification, application and evaluationMid-Term Monetary Policy Statement 2020
criterion for entities to be admitted into the sandbox. The sandbox provides an opportunity for innovators to connect to banks and other financial system players.”
This has been a massive hurdle for smaller fintech companies because, under the current regulations, a payment service provider has to a regulated financial institution. For the minnows in the fintech space, this creates a massive barrier to entry and makes it near impossible to compete with the likes of EcoCash.
Other goals the sandbox hopes to accomplish are (through the National Fintech Steering Committee):
So… hopes are high that this process can actually prove to be a productive process which will allow for the expansion of fintech enterprises. Earlier on I mentioned Golix, and the hope is that cryptocurrencies and crypto exchanges are also part of the sandbox.
Zimbabwe cannot continue to stand idle while cryptocurrencies are making strides elsewhere. Over the months we have seen Paypal, Visa and Mastercard accommodate cryptos on to their network. The sandbox needs to, at the very least, address how to introduce cryptocurrencies as a means of transacting in the country.
While we are on the point of cryptocurrencies in Zimbabwe. A couple of weeks ago we had a conversation with Prosper Mwedzi who is a Financial Services Lawyer. Prosper has drafted a private cryptocurrency bill he is hoping to pass in Parliament. We asked questions about the bill and all that it hopes to achieve and you can listen to that conversation with the link here.
Establish trust and be very careful...
It is time...
Trippy as hell...