The Reserve Bank of Zimbabwe (RBZ) has announced its intention to launch a Regulatory Sandbox Framework later this year, as detailed in its mid-term policy statement. This initiative is designed to foster the adoption of financial technologies within the country. The RBZ plans to operationalize the framework following a comprehensive consultative process with key stakeholders. The proposed framework will first be released to the market for comments before being finalized and implemented. It will explicitly outline the qualification, application, and evaluation criteria for entities seeking admission into the sandbox, offering innovators a crucial platform to connect with banks and other financial system participants. The RBZ is the primary regulator for all financial services in Zimbabwe.

Zimbabwe's move positions it alongside other African nations such as Kenya, Mauritius, Sierra Leone, Uganda, Mozambique, and Nigeria, all of whom have either launched or are in the process of designing their own Sandbox Regulations. Among these, Mauritius stands out as the sole African country to embrace cryptocurrency solutions within its Fintech Regulatory Sandbox.

Kenya's Capital Markets Authority (CMA) initiated its regulatory sandbox in 2019, specifically to enhance the adoption of fintech innovation within its capital markets. This policy allowed fintechs to conduct live tests on innovative products and services aimed at broadening the scope of Kenyan capital markets. Companies incorporated in Kenya were invited to apply for a one-year period, subject to a non-refundable fee; individual applications were not accepted. Notably, cryptocurrency projects and developers were barred from participating, with only blockchain firms not dealing with cryptocurrencies being considered, due to the CMA's mandate not extending to cryptocurrencies.

Similarly, the Bank of Sierra Leone (BSL) launched its regulatory sandbox program in 2018, despite the country's notably low financial inclusion rates. The BSL then introduced a pilot program under these regulations to promote financial innovations and technologies, also explicitly exempting cryptocurrency platforms. This effort culminated in the Bank of Sierra Leone Pilot Sandbox Framework for FinTech Challenge.

In contrast, the Financial Services Commission (FSC) of the Republic of Mauritius published its regulatory sandbox policy framework in late 2018, uniquely including cryptocurrency blockchain services for fintech startups. Unlike Kenya and Sierra Leone, the Mauritian government actively welcomed collaboration with crypto developers, recognizing their potential to boost private investment and employment opportunities within the nation. More recently, the Central Bank of Nigeria also released its draft CBN regulatory sandbox framework to manage innovation in Nigeria's fintech sector. However, the Nigerian fintech sandbox, similar to Kenya and Sierra Leone, did not accept cryptocurrency solutions, as cryptocurrencies are not recognized as legal tender there.

The effectiveness of these regulatory sandboxes has varied. Since Kenya's Regulatory Sandbox went live in March 2019, six innovative fintech companies have been admitted to deploy and test their inventions, with one successfully completing the scheme and preparing to introduce its innovations to the broader capital markets. Sierra Leone's Pilot Sandbox Fintech Challenge produced a winner and four finalists, who received $100,000 in funding investment to scale their products. According to Mauritius's Economic Development Board (EDB), over nine fintech startups and cryptocurrency companies have been granted regulatory sandbox licenses, including up to three crypto-based startups. The Mauritian government is even working towards expanding its regulatory sandbox to cover crowdfunding platforms.

In summary, regulatory sandboxes are still an emerging concept in Africa's developing countries, typically operating for short durations. While governments and central banks in these nations aim to monitor and regulate fintech innovation, it is crucial that these efforts do not inadvertently suppress their potential. There is a strong argument for these bodies to reconsider the incorporation of cryptocurrency and blockchain services into their frameworks to fully harness the transformative prospects of financial technology.