Regulating FinTech: Lessons from Africa
(2018) 19(2) San Diego International Law Journal 311
62 Pages Posted: 7 Mar 2018 Last revised: 13 Jul 2018
Date Written: January 1, 2018
Technological innovation in finance (FinTech) has been on the rise in recent years, creating new challenges for regulators. These challenges vary significantly depending on the region in question and type of economy, not least because different technologies are applied to tackle different problems. This paper focuses on regulatory frameworks of two leading jurisdictions in terms of FinTech development in Sub-Saharan Africa: Kenya and South Africa. As the developments in the region cannot be analysed in isolation from the global trends in FinTech regulation, we approach the matter systematically. We start by clarifying the existing terminology and preparing a comprehensive matrix of various challenges in FinTech regulation: in doing so, we do not take the interests of innovation promotion for granted and adopt a balanced approach, weighing various – often mutually exclusive – considerations against each other. We also argue that rule of law challenges, rather than technical problems, remain the key obstacles to adequate FinTech regulation. We then proceed to discuss the specific regulatory issues in two African jurisdictions that are current regional leaders in the FinTech space – Kenya and South Africa. We conclude by synthesising a set of recommendations for improving the FinTech regulatory systems in the two countries, in the light of the earlier matrix of regulatory challenges. Many findings in this paper (such as the need for improved methodology of social and economic impact analyses and various policy considerations for structuring the FinTech regulation) are relevant outside the African context and have universal application.
Keywords: FinTech, Innovation, Regulation, Sandbox, Kenya, South Africa, mobile money, virtual currency, economic impact
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