Question

provide practical recommendations to how a regulatory body such as NAMFISA and the bank of Namibia would regulate"Fin-Tech" and highlight the importance of market regulation

Answer 1

FinTech Regulatory Framework in

The Central Bank of Namibia has issued the following guidelines which impact FinTech companies in Namibia:

1. Guidelines on Mobile Money Services in country
2. Guidelines on Operations of Electronic Payment Channels in the country
3. Regulatory Framework for the Use of Unstructured Supplementary Service Data (USSD) for Financial Services
4. Guidelines on International Money Transfer Services
5. Guidelines on International Mobile Money Remittance Service
6. Exposure Draft of New CBN Licensing Regime for Payment Service Providers
7. Regulation for Direct Debit Scheme in Namibia

SOME RECOMMENDATIONS

While the CBN's attempt to use regulation to drive financial inclusion is commendable, the piece-meal approach adopted by the Bank creates a fragmented regulatory framework. Although, it is conceded that this approach may have been adopted for regulation to progressively catch-up with the fast growing FinTech innovation and to avoid stymieing the nascent FinTech industry in the country, yet it is this writer's view that the various guidelines and laws that affect the industry must be integrated and harmonized to form a unified FinTech policy. There is no gainsaying that a cohesive framework will increase the ease of doing business in the FinTech ecosystem, promote regulatory certainty and boost investors' confidence in the industry. However, this framework must be flexible enough to accommodate further growth and stimulate innovation, rather than frustrate it.

Furthermore, it is suggested that the existing and proposed laws regulating the FinTech ecosystem be aligned with the CBN's National Financial Inclusion Strategy to create a harmonized regulatory and policy thrust.

In addition, the long-awaited regulatory sandbox for FinTech start-ups is overdue and ripe for launch by the Namibian government. The presence of a sandbox will help FinTech start-ups manage their regulatory risks, experiment with innovative financial products and contain the consequences of failure. A sandbox may also be used to test the effect of policies on FinTech companies before widespread application. Regulatory sandboxes have been adopted by other countries, including the UK, Singapore, Australia, Canada, Hong Kong and South Korea.

Innovation offices, which are more cost-effective than regulatory sandboxes, may also be set up to create a platform for innovators and regulators to collaborate. Through innovation offices, regulators are able to engage with and provide regulatory clarification to financial service providers that offer innovative products and services, while learning more about the industry and obtaining clarity for further regulation. Examples of innovation offices include the Estonian Financial Supervision Authority (EFSA) and Indonesia's OJK Innovation Centre for Digital Financial Technology.

The African tech landscape is attracting huge attention from investors across the globe. With a rising population and a large percentage of unbanked people, Namibia is an attractive hive for FinTech innovation. However, innovation can only thrive within a nurturing environment and well-guided regulations and policies can play a huge role in creating this environment.