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Three Firms Admitted to the CMA Regulatory Sandbox

Nairobi, 31 July 2019… Following the approval of the Regulatory Sandbox Policy Guidance Note (Regulatory Sandbox PGN) with effect from 26 March 2019, the Capital Markets Authority (CMA) has been receiving applications from fintech firms seeking to be admitted into the Regulatory Sandbox. As at July 2019, three applicants have been admitted to live test innovative solutions with the capacity to deepen and enhance the efficiency of capital markets.

Innova Limited has been approved to test its cloud-based data analytics platform designed for use by Investors, Fund Managers, Custodian Banks, Actuaries, Pension Administrators and Regulators. The approval restricts the testing period to 12 months. The second fintech, Pezesha Africa Limited has been approved to test an internet-based crowd-funding platform through which investors can provide loan facilities structured as loan notes (debentures) for Small and Medium Enterprises (SMEs). The approval restricts the testing period to 12 months. The third fintech firm admitted has elected to remain anonymous during its three months test period, except to its closed group of test subjects, an option provided in the Regulatory Sandbox PGN.

CMA Chief Executive Mr. Paul Muthaura observed that Innova and Pezesha will be updating the Authority on the milestones achieved, challenges faced and mitigation measures implemented in line with the test plans submitted to the CMA during the application process.

‘The Regulatory Sandbox allows live testing of innovations under a less onerous regulatory regime and is expected to attract fintech companies and existing capital markets licensees to test the application of technology to financial services. The admission of the three firms is an important milestone noting that the Authority had set itself a target to admit five firms to the Regulatory Sandbox by 2023’, said Mr. Muthaura.

To enhance the Authority’s investor protection mandate, Sandbox participants are required to comply with minimum regulatory requirements prescribed by the Regulatory Sandbox Policy Guidance Note such as submission of test plans, which outline key test objectives, testing metrics, performance indicators, and safeguard and remedial measures for test clients. The PGN specifies that the Authority can revoke or suspend an approval to participate in the Regulatory Sandbox at any time before the end of the test period and can take enforcement action against a participant in breach of the regulatory requirements.

Upon exit from the Sandbox, participants could be granted a license or approval to operate in Kenya subject to compliance with existing legal and regulatory requirements. The Authority may in the alternative grant permission to operate in Kenya subject to compliance with the terms of a letter of no objection. He observed, ‘where there is need for a broader legal or regulatory reform, we may adopt new regulations, guidelines or notices pursuant to Section 12 and 12A of the Capital Markets Act, based on insights gained from the Regulatory Sandbox test.’ A denial of permission to operate in Kenya under prevailing legal and regulatory requirements may also be issued.

Mr. Muthaura noted that at minimum, Sandbox applicants need to be companies incorporated in Kenya, or existing licensees of the Authority or other capital markets regulators. Fintech firms are assessed for admission based on their intent to offer innovative products, solutions or services with the potential to deepen Kenya’s capital markets following successful exit from the Sandbox.

The Regulatory Sandbox serves to continuously improve CMA’s understanding of emerging technologies as well as the risks and opportunities that the innovations portend for investors, financial institutions and the regulator. The insights from the tests allow for a more evidence-based approach to regulation.

The Regulatory Sandbox is not an incubation center, physical or virtual space. It is not applicable for proposed products, services or business models that are already clearly addressed under existing laws and regulations.



The Capital Markets Authority (CMA) was set up in 1989 as a statutory agency under the Capital Markets Act Cap 485A. It is charged with the prime responsibility of both regulating and developing an orderly, fair and efficient capital markets in Kenya with the view to promoting market integrity and investor confidence. The regulatory functions of the Authority as provided by the Act and the regulations include; Licensing and supervising all the capital market intermediaries; Ensuring compliance with the legal and regulatory framework by all market participants; Regulating public offers of securities, such as equities and bonds & the issuance of other capital market products such as collective investment schemes; Promoting market development through research on new products and services; Reviewing the legal framework to respond to market dynamics; Promoting investor education and public awareness; and Protecting investors’ interest.

For more information, please contact: Antony Mwangi, Head of Corporate Communications on This email address is being protected from spambots. You need JavaScript enabled to view it.