The FinTech landscape in Zambia has grown tremendously over the last two years since UNCDF conducted its first scoping of the industry in 20181.

FinTech activities in Zambia range from the provision of payments platforms to digital investment advisory services, all with the aim of meeting specific customer needs in a market niche. However, many FinTech entrepreneurs are often unaware of the regulation or policy requirements for their innovation, or the industry at large.

By collaborating with the Bank of Zambia (BoZ), the Securities and Exchange Commission (SEC) and the Zambia Information Technology Communication Authority (ZICTA), UNCDF and BongoHive Innovation and Technology Hub hosted a series of webinars to share critical information on each regulator’s role in the industry, what regulation they applied to the sector and how they monitor businesses offering digital financial services. These sessions aimed to meet the gap that FinTech entrepreneurs and start-ups recognised with regards to effectively navigating existing and potential regulations.

Open to the public, the Regulatory sessions were a rich learning platform for those who participated because although most regulators in Zambia have an open-door policy with the industry, FinTechs often do not have the right contacts or adequate knowledge about how to engage with regulators. During the webinars, regulators explained the policy areas that were of greatest concern to the regulator with regards to innovation within the digital financial services sector. For example, ZICTA spoke extensively about third party data sharing and data sharing protocols, which is an area of concern regarding protecting customers, who may also subscribe to FinTech products and services. These sessions were also an opportunity for the regulators to interact with members of the FinTech ecosystem, who would not ordinarily have the opportunity to engage with the regulator on that level. Regulators heard the concerns or questions from members of the public, such as USSD code issuance, the differences in the codes and requirements for the codes, what ZICTA looks for in the network security standards.

BoZ shared their mandate with regards to oversight of the digital payments industry in Zambia and responded to queries around requirements for licensing, details around payment switching platforms, and the development of cryptocurrencies in Zambia. SEC highlighted new developments in Zambia’s capital market as well as the role they play in monitoring it. Additionally, SEC detailed their work in developing a regulatory sandbox that is meant to encourage FinTechs with innovative digital solutions that have the potential to deepen capital markets and make them more inclusive. The sandbox targets innovations including, but not limited to: peer-to-peer lending platforms, crowdfunding, digital investment advisory, and tokenisation. Where minimum capital requirements for operating on the capital market were previously significantly steep, the sandbox hopes to provide an environment that evaluates each innovation on a case by case basis, relaxing selected requirements and criteria.

These regulatory sessions are an important intervention for UNCDF and BongoHive as both organisations work to strengthen the Zambian FinTech sector in order for the FinTechs to succeed and be able to scale nationwide and reach all Zambians. Enabling FinTechs, and others interested in offering financial products and services, to interact with the regulator most relevant to their products allows them to fully understand the regulatory environment and empowers them with the knowledge to ensure their innovation meets regulatory compliance. This knowledge improves the FinTechs’ chances of a successful launch on the market and increases customer confidence in their platforms.

The three sessions were attended by over 90 people, with 31 percent female participants. FinTechs enrolled in the FinTech4U Accelerator Programme also attended.

Participants shared their views on what they learned and heard through the sessions.

“It was a very interesting presentation from Bank of Zambia. There’s definitely a need to revise the law as banking processes (such as clearing and settlement) are no longer what the Act envisaged. It’s good for regulation to be responsive to the changing market.” – Bwalya Musonda.

“We love the idea of a Regulatory Sandbox. I think it’s timely for Zambia, so we hope it can be established quickly.” – Mukopaje Singogo.

“Working in financial education and literacy, understanding FinTech at macro level from the Regulator point-of-view has been truly insightful.” – Sampa Salome Chilambwe.

During the webinars, FinTechs asked numerous questions around data sharing, appropriate licensing, and how to engage with the regulator in the long term. In addition to the knowledge gained during the session, FinTechs gained access to each regulator through readily available to staff to respond to queries or support their licensing journey.

This series of webinars falls within the work UNCDF and BongoHive do with both the regulators and FinTechs in the FinTech4U Accelerator Program. Under the FinTech4U Accelerator, start-ups offering DFS products and services to key customer segments receive in-depth technical assistance from subject matter experts and regulators. As the FinTech sector grows and strengthens in Zambia, UNCDF and BongoHive will continue to work with regulators and FinTechs to safeguard the sector, including more platforms of engagement such as these.