This archive report was first published on 31 July 2019.
On July 31, 2019, the Capital Markets Authority (CMA) announced the admission of three financial technology firms to its Regulatory Sandbox. The Regulatory Sandbox is a platform that allows innovative solutions to be tested and refined before being introduced to the market.
The three firms admitted to the Regulatory Sandbox are Innova Limited, Pezesha Africa Limited, and a third firm that has chosen to remain anonymous. Innova Limited will be testing its cloud-based data analytics platform, designed for use by investors, fund managers, custodian banks, actuaries, pension administrators, and regulators.
Pezesha Africa Limited has been approved to test an internet-based crowd-funding platform that allows investors to provide loan facilities structured as debentures for Small and Medium Enterprises.
According to Paul Muthaura, Chief Executive of the CMA, the admission of the three firms is an important milestone, noting that the Authority had set itself a target to admit five firms to the Regulatory Sandbox by 2023.
During their three-month test period, Innova and Pezesha will be required to update the Authority on the milestones achieved, challenges faced, and mitigation measures implemented in line with the test plans submitted to the CMA during the application process.
For admission to the Regulatory Sandbox, fintech firms are assessed based on their intent to offer innovative products and solutions with the potential to deepen Kenya's capital markets after exit from the Sandbox.
Participants in the Sandbox are required to comply with minimum regulatory requirements, including submission of test plans, testing metrics, performance indicators, and remedial measures for test clients.
Upon exit from the Sandbox, participants could be granted a license or approval to operate in Kenya, subject to compliance with existing legal and regulatory requirements.
