Regulatory Requirements for Fintech in Equatorial Guinea: A New Era of Financial Inclusion
Equatorial Guinea, a country in Central Africa, has witnessed significant growth in electronic money transactions over recent years. According to the Bank of Central African States (BEAC), financial transactions using electronic money increased from 303 million in 2017 to 572 million by the end of 2018. This increase sparked calls for a regulatory framework, leading to the adoption of Regulation No 04/18/CEMAC/UMAC/COBAC on payment services within the CEMAC (Central African Monetary Union) zone.
Key Provisions of the Regulation
The new regulation introduces a non-banking model for issuing e-money, allowing entities other than credit or microfinance institutions to provide payment services. This development has significant implications for the Fintech sector in Equatorial Guinea.
- Defines payment institutions as entities that provide exclusively payment and related services
- Prohibits foreign exchange payment instruments, such as cheques, promissory notes, bills of exchange, and documentary credits
- Restricts deposit collection activities
Payment Institutions in Equatorial Guinea
Prior to the adoption of the new regulation, Mobile Money transactions were primarily powered by telecom companies under technical partnership agreements with licensed banks authorized to issue e-money. With the new regulation, payment services are subject to authorization issued by the National Monetary Authority of the CEMAC Member State where the company (applicant) was incorporated and approved by the Banking Commission of Central Africa (COBAC).
Categories of Agents
The Regulation also introduced two categories of agents: distributors and sub-distributors.
- Distributors: Can perform a wide range of payment services
- Sub-distributors: Limited to specific activities as provided by law
Impact on Fintech Companies
The regulation has opened up opportunities for fintech companies in Equatorial Guinea to issue e-money without the obligation of partnering with credit or microfinance institutions. However, they require authorization for using a specific technology platform.
Conclusion
The adoption of Regulation No 04/18/CEMAC/UMAC/COBAC on payment services within the CEMAC zone has set the tone for the anticipated success of fintech companies in Equatorial Guinea. The regulation provides clarity and direction for fintech companies operating in the region, promoting financial inclusion and innovation.