The Bank of Uganda (BOU) has announced the creation of a regulatory sandbox to allow fintech start-ups to test their innovative financial products in a safe environment. One company, M/S Wave Transfer Limited, has already been granted permission to use this sandbox to test its rapid response (QR) technology.
The BOU said on June 15 that it is now seeking more companies to develop and test their financial innovations in this framework. Meanwhile, the BOU statement goes into further detail on why the central bank decided to start the sandbox. The statement explains:
The Regulatory Sandbox Framework will encourage financial services innovation, attract capital and support for fintech businesses, and allow innovators and regulators to learn from one another. This is intended to increase the use of electronic payments, digital financial services, and overall financial inclusion.
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Meanwhile, the BOU will undertake “a fit and suitable examination on each major shareholder, director, or management of the application,” according to a Ugandan government statutory instrument dated March 5, 2021. The central bank would also look at whether “an applicant fits the criteria and basic conditions for operating a sandbox.”
Some of the determining elements that the BOU would evaluate, according to the statutory document, include whether the invention is real or if the sandbox offers consumer advantages and protections. The preparedness of the sandbox for testing, as well as the suitability of the exit strategy, will be taken into account by the central bank.
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Meanwhile, according to the law document, fintech start-ups that want to be included in the regulatory sandbox framework must pay a $290 application fee (one million Ugandan shillings).
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Charles Rapulu Udoh
Charles Rapulu Udoh is a Lagos-based lawyer who has advised startups across Africa on issues such as startup funding (Venture Capital, Debt financing, private equity, angel investing etc), taxation, strategies, etc. He also has special focus on the protection of business or brands’ intellectual property rights ( such as trademark, patent or design) across Africa and other foreign jurisdictions.
He is well versed on issues of ESG (sustainability), media and entertainment law, corporate finance and governance.
He is also an award-winning write