Kenya is looking to establish a regulatory sandbox to support the FinTech sector in the country, with its being ‘at the cusp of operationalising that policy.’
Paul Muthaura, CEO at Kenya’s Capital Markets Authority (CMA), stated how the group has helped to foster this supportive environment through progressive steps. This includes signing cooperation agreements with regulators such as the Australia Securities and Investments Commission (ASIC) and the Abu Dhabi Global Markets Financial Services Regulatory Authority, where FinTech support frameworks are already in place.
Through these agreements, the authority has built a significant capacity for regulating the FinTech space. The group also benefitted from strategic engagements with domestic partners.
In a speech Capital Markets Authority CEO Paul Muthaura said, “The successful implementation of the Regulatory Sandbox is dependent on putting in place the necessary governance, internal processes and procedures at the Authority. To this end the Authority has set up a ‘Sandbox Review Committee’ (SRC) whose Mandate is to provide tailored, coordinated regulatory support, dedicated to the Sandbox project and ecosystem.”
This review committee will also handle reviews around sandbox applications, monitor the implementation of test plans by successful entrants and transition to licence categories.
The new regulatory sandbox would only support companies which are operating within the regulatory perimeter which is covered by the CMA.
Muthaura outlined that while FinTech offers a lot of opportunities to drive additional demand for capital market products and services, caution is still needed. New players in the market introduce fresh prudential risks which could destabilise the market.
In order to support the regulatory work and ensure it builds a safe environment for innovation, CMA has joined the Global Financial Innovation Network, which opened up earlier in the year. The group is made up of 29 financial regulators working together to support regulations and cross-border cooperation.
Paul Muthaura said, “I am optimistic that this programme will promote product development, revolutionize and democratize access to the capital markets by Fintech firms and companies in Kenya.”
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