Financial Crime World

Sierra Leone Takes Measured Approach to Regulatory Sandbox for Fintech Companies

Promoting Financial Innovation in West Africa

Sierra Leone has launched its inaugural regulatory sandbox pilot program, aimed at testing and evaluating novel technologies and business models. The program kicked off earlier this month and will see four fintech companies work with a dedicated team from the Bank of Sierra Leone (BSL) over the next 12 months to refine their regulatory approaches.

Addressing Financial Inclusion

The pilot program is part of BSL’s efforts to promote financial inclusion in the country, which has one of the lowest financial inclusion rates in the world. According to the 2017 Global Findex, fewer than 20 percent of adults in Sierra Leone have a financial account, compared to less than half the average for Sub-Saharan Africa.

Regulatory Sandbox Approach

The regulatory sandbox approach allows fintech companies to test their products and services in a controlled environment, with real-time feedback from regulators. The program is designed to identify potential risks and opportunities, and to inform an innovative approach to financial inclusion.

Design Features

The BSL’s regulatory sandbox has several design features that distinguish it from other initiatives around the world:

  • Clear Financial Inclusion Objective: Linking the program to Sierra Leone’s National Financial Inclusion Strategy 2017-2020
  • Coordination with Ecosystem-Building Initiatives: FinTech Challenge and Sierra Leone FinTech Association
  • Dedicated, Cross-Functional Team: Primary responsibility for all sandbox-related activities
  • Institutional Commitment and Leadership: Office of the Governor providing deep engagement and support from the start
  • Sunset Provision: Review and reauthorization after the initial one-year term

Lessons Learned

The Sierra Leonean approach to regulatory sandboxes offers valuable lessons for financial regulators around the world. By linking the program to national financial inclusion strategies, assessing market demand, committing dedicated resources, and demonstrating institutional commitment, BSL has created a model that is worthy of replication.

Conclusion

Sierra Leone’s regulatory sandbox pilot program demonstrates a measured approach to promoting financial innovation in a fragile state environment. The program’s design features offer valuable lessons for financial regulators around the world, highlighting the importance of linking programs to national strategies, assessing market demand, and demonstrating institutional commitment.