The financial system is going through a period of rapid innovation that is disintermediating the financial services value chain. This can have significant benefits for financial inclusion- providing access to, and enabling active usage of, affordable financial products and services to all individuals while supporting a diverse and competitive marketplace.
Financial regulators around the world are looking for more flexible ways to engage with fintech companies while being mindful of the inherent risks. Although the importance of interacting with this sector is widely accepted, the most appropriate instrument to do so is still being determined.
A tool that has become increasingly popular and synonymous with innovation is the ‘Regulatory Sandbox’. While nuances exist, they are fundamentally a regulator-controlled environment that allows participants to test their products, services and business models. However, Sandboxes are only one of several tools that regulators can use and have both benefits and challenges associated with them.
Depiction of some of the different tools available to regulators to enable Fintech
Tech startups and business angels are not what comes to mind when thinking of the Czech Republic (CR). Instead, this small central European country is known for its beer, scenic bridges crossing the Vltava river, and existential writers. Not so easy to add “vibrant entrepreneurial hub” to the list as it celebrates the 100th anniversary of Czechoslovakia. Nevertheless, that's exactly what the CR policymakers intend to do.
CR has what it takes to be an entrepreneurial hub for Central Europe
Starting a business is a risky endeavor and requires courage. It is also an opportunity. Whether this opportunity will materialize depends on how well the aspiring entrepreneur is prepared and how adaptable the startup is. Equally important is the policy and legal framework that can mitigate the risk and increase chances of success.
Company registration is one of the cornerstones of a functioning economy. A business register maintains the repository of data on companies authorized to operate in a given jurisdiction. With many businesses appearing every day, company registries play a key role in formalizing the economy, promoting access to finance for small enterprises, and ensuring legal protection for investors. The breadth of the information stored in the registers also help policy makers follow business dynamics and study the impact of business environment reforms.
When I asked a table of Nigerian bankers whether corporate debt to finance solar off-grid and mini grid companies would find favor in local capital markets, they literally laughed at the idea. No, they said very clearly, there’s no mandate for green here, certainly not among the funds they represented, and off-grid solar was new and untested anyway.
Such reluctance of many local financial institutions (FIs) to invest has been a major impediment to the Nigerian solar off-grid market which lags compared to other African countries such as Kenya.
Nigerian solar companies discuss finance model
A year ago, Farzana had no idea that an online business would so drastically change her life. She was drowning in debt with no way of repaying, worrying about her family’s financial future. Reaching for a lifeline, she joined GharPar, a women-founded, women-led social enterprise that connects beauticians with clients seeking at-home salon services through an Uber-like digital platform.
“The empowerment of young people and women lies at the heart of our organization,” declares Fatouma Harber — human rights activist, teacher, blogger and CEO of SankoréLabs. SankoréLabs is an incubator that also provides training and co-working spaces to young entrepreneurs in Timbuktu in northern Mali. Named for the city’s world-renowned historical university and 14th century mosque, SankoréLabs provides aspiring entrepreneurs with support and a space to work. Along with meeting incubees’ IT, internet and networking needs, the incubator is also a vehicle to promote better local governance and enhance citizen engagement in a region that desperately needs both.
There is growing evidence that outward foreign direct investment (OFDI) can increase a country’s investment competitiveness, crucial for long-term, sustainable growth. Some countries are thus using OFDI as a channel for new development and a catch-up strategy to acquire knowledge and technology, upgrade production processes, boost competitiveness, augment managerial skills, and access distribution networks.
