MICROCAPITAL BRIEF: Bank of Ghana, Emtech Solutions Launch Regulatory Sandbox to Encourage Innovation in Finance, Financial Inclusion

The Bank of Ghana (BoG), the country’s central bank, recently launched a regulatory sandbox – a mechanism for testing business models not covered by existing regulations, in partnership with the US-based financial technology (fintech) firm Emtech Solutions. Following a successful pilot phase, BoG adopted Emtech’s digital regulatory review and reporting platform, through which financial service providers can apply to deploy a given service. The central bank also will use the platform to assess and mitigate risks posed by the new services as they enter the market.

The goal of the program is “harnessing the potential of technology to develop an efficient and inclusive financial service industry without risking financial stability.” In particular, BoG anticipates innovation in artificial intelligence, data analytics and machine learning to improve various tasks, such as credit scoring, know-your-customer (KYC) procedures and fighting money laundering. Both licensed and unlicensed financial services providers are invited to make use of the regulatory sandbox.

Emtech Solutions, founded in 2019, provides digital banking tools to central banks and financial services providers in developing countries, including digital payment solutions and the aforementioned regulatory sandbox platform. The stated goal of the firm is “enabling financial inclusion by transforming financial ecosystems.”

Established in 1957, BoG has regulatory and supervisory authority over banking and other financial institutions in Ghana. The mandate of the institution is to “maintain stability in the general level of prices, to ensure efficient operation of the banking and credit systems, and to support general economic growth.” Its activities include: (1) issuing monetary and fiscal policies; (2) acting as a banker and financial adviser to the government; and (3) performing annual on-site audits of the microfinance institutions within its purview through its Other Financial Institutions Supervisory Department. As of year-end 2021, BoG had total assets of GHS 112 billion (USD 11.3 billion).

By Saulius Simonas Ramanauskas, Research Associate

Sources and Additional Resources

BoG regulatory sandbox guidelines
https://www.bog.gov.gh/news/regulatory-sandbox-framework

BoG press release
https://www.bog.gov.gh/news/press-release-bank-of-ghana-regulatory-sandbox

Emtech press release
https://emtech.com/bank-of-ghana-goes-live-on-emtechs-regulatory-platform

Emtech homepage
https://emtech.com

LinkedIn profile on Emtech
https://www.linkedin.com/company/emtechsolutionsinc

BoG homepage
https://www.bog.gov.gh

Previous MicroCapital brief on BoG
https://www.microcapital.org/microcapital-brief-bank-of-ghana-issues-crowdfunding-policy

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