In a bold and visionary move aimed at propelling innovation and progress within the financial sector, the National Bank of Rwanda (NBR) has introduced a regulatory sandbox. This ground-breaking initiative has been established to create a nurturing environment for the testing and launch of cutting-edge financial products and services. It entails providing relaxations or waivers on the stringent requirements typically associated with issuing financial services under the purview of the National Bank of Rwanda. The establishment of this regulatory sandbox not only underscores NBR's unwavering commitment to fostering innovation but also signifies its dedication to crafting an accommodating regulatory framework for forward-thinking innovators.
The regulatory sandbox extends a warm invitation to a diverse array of participants, including start-ups, well-established financial institutions, fintech enterprises, and enterprising entrepreneurs. To be eligible for consideration, applicants must satisfy specific criteria outlined in the regulation governing the establishment of the regulatory sandbox, as delineated in Article 4. These criteria encompass the innovativeness of the proposed product, its capacity to mitigate risks, and its potential to enhance accessibility and affordability of financial services, thereby contributing to the cause of financial inclusion. Successful applicants will be granted approval to conduct trials of their innovative products or services within the controlled confines of the sandbox. They will also be permitted to engage a limited number of customers over a duration of 12 months.
It is noteworthy that the NBR sandbox accommodates financial innovations through a structured cohort system. Since the inception of this initiative last year, three cohorts have already been initiated. However, what sets the latest call for applications for the 4th cohort apart is its exclusive focus on insurance products. This thematic emphasis on insurance aims to attract innovators who are willing to tackle existing challenges and address gaps within the insurance industry. According to findings from the Finscope 2020 consumer survey report, insurance penetration in Rwanda currently stands at 17%, encompassing 1.2 million Rwandans, up from 9% in 2016 (excluding Community Based Health Insurance). The primary impediments to increased insurance adoption include issues related to accessibility, affordability, and a general lack of awareness. It is against this backdrop that the 4th cohort's applications were initially opened on August 14, 2023, with a deadline of September 15, 2023. However, we are delighted to announce that the deadline has been extended until September 25, 2023, with the aim of encouraging a greater number of applicants.
The transformative potential of innovations, especially those facilitated by technology, cannot be overstated. History has shown that these innovations can serve as catalysts for the rapid adoption of services. Drawing inspiration from the success story of digital payments, which significantly increased financial inclusion within Rwanda's informal sector by providing access to financial services such as remittances, payments, digital loans, and savings, we believe that technology has the capacity to replicate this success within the insurance industry. Innovators are encouraged to identify pain points within the provision and consumption of insurance products and develop solutions to address them.
Presently, the regulatory sandbox established by the National Bank of Rwanda boasts six participants actively testing solutions in areas such as payments, lending, and crowdfunding. The overarching objective is to nurture innovative concepts within the financial sector, allowing them to flourish and make a meaningful impact on the market. We are pleased to announce that the NBR Sandbox is currently accepting applications for its Insurance Thematic Cohort, with a non-thematic cohort scheduled to commence in December 2023. Applicants may submit their applications conveniently online via a dedicated web form accessible on the National Bank of Rwanda's official website. Additionally, for those seeking further guidance or assistance, the sandbox team can be contacted via email at sandbox@bnr.rw.
We look forward to witnessing the innovative strides that this regulatory sandbox will continue to facilitate within Rwanda's financial landscape.
About NBR
The National Bank of Rwanda strives to be a world-class central bank that contributes to economic growth and development, by using robust monetary policy tools to maintain stable market prices. The bank ensures financial stability in a free market economy as it embraces innovations, diversity, inclusiveness, and economic intervention.