In efforts to bolster the startup ecosystem in Uganda, the Bank of Uganda launches Regulatory Sandbox Framework. The framework is a set of rules and requirements that allows innovative financial solutions, for example, fintech startups, to be tested in a live controlled environment with BOU’s oversight and subject to the necessary safeguards. This is a great milestone for startups and young innovators in Uganda.
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The startup ecosystem operates in a free environment, that is to say one that is bound by few limitations. This comes as an added advantage because many of these startups are operating with limited funding and are trying to minimize costs where they can.
However, this itself usually poses challenges for the startups as they start to grow. Working in an environment with no rules leaves them open to risks which could halt their progress.
A sandbox regulatory framework is a tool to allow people who have innovative products to utilize them in the market under the supervision of Bank of Uganda which will limit the risks that innovators are exposed to.
More opportunities in-store as Bank of Uganda launches regulatory sandbox
Bank of Uganda believes that the Regulatory Sandbox Framework will promote financial services innovation, attract capital and funding for fintech firms and provide shared learning opportunities for the innovators and regulators. This is expected to promote uptake of electronic payments, digital financial services and financial inclusion in general.
The startups can apply to get embedded within Bank of Uganda structures or apply to get extend for even more. This will come at a cost of UGX 5million.
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Working in a controlled environment creates more opportunities for startups since they are perceived as trustworthy by investors. It also gives startups the chance to learn and grow in an environment that exposes them to fewer risks than an unregulated set up where there are no rules.
Bank of Uganda launches regulatory sandbox providing benefits for these startups like access to mentorship and coaching. Startups could also form partnerships.
M/S Wave Transfer Limited received approval to test Quick Response technology under the Sandbox arrangement on April 12, 2021. Bank of Uganda invites more firms to develop and test financial innovations under the Regulatory Sandbox.
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