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The Bank of Botswana has released its long-awaited Regulatory Sandbox Guidelines, formalising a framework that allows fintech startups and licensed financial institutions to test innovative financial products and business models under controlled supervision.
The November 2025 guidelines mark one of the most significant regulatory shifts in Botswana’s financial sector in years, aiming to balance market innovation with system stability and consumer protection.
The central bank says the sandbox is designed to fast-track market entry for fintech solutions that are “not currently covered” by existing financial laws, or which require flexibility from traditional regulatory requirements to operate. It also creates a pathway for the regulator to adapt or amend rules based on insights gathered during testing—potentially paving the way for future legislation aligned to the digital economy.
Mandate to Innovate
In the foreword to the guidelines, the Bank notes that Botswana’s fintech ecosystem is growing rapidly, offering opportunities to expand digital payments, deepen financial inclusion and reduce transaction costs, particularly for underserved consumers and small enterprises. However, it cautions that technology-driven financial innovations also carry risks that must be mitigated through “effective risk management measures to safeguard the safety, integrity, stability and soundness of the financial system.”
The sandbox therefore operates as a “live, contained environment” where innovators can run limited-scale pilots for up to six months, subject to strict reporting duties, customer safeguards and regulatory oversight. Extensions may be granted only at the Bank’s discretion.
Who Can Apply
The framework opens doors to a wide range of players, including fintech startups entering the market for the first time, tech firms partnering with licensed institutions, and banks or payment providers experimenting with new digital products. Applicants must show that their solution addresses real gaps in the financial system and aligns with national policy goals, especially the Financial Inclusion Strategy and Roadmap.
To qualify, an applicant must demonstrate readiness through a detailed business plan, robust governance structures, a clear testing methodology, risk management framework, technological capacity, and an exit plan to either scale commercially or wind down smoothly. The Bank emphasises that directors and senior management must be “fit and proper” under Botswana’s banking laws.
How the Testing Works
Once admitted, participants must integrate with the Bank’s real-time reporting tools and make their systems visible for remote supervisory access. Testing is meant to be hands-on and data-driven: participants must track milestones, customer onboarding patterns, risk incidents, fraud attempts, and complaint resolutions, and submit monthly reports. A final evaluation is required 30 days before the end of the testing period.
Customer protection is a core element. Sandbox users must be explicitly informed that the product is experimental and not covered by the Deposit Insurance Scheme. Firms are also required to segregate customer funds, maintain dispute-resolution mechanisms, and implement AML/CFT controls.
Strict Conditions
The Bank reserves the right to suspend or withdraw participation at any time if a company breaches conditions, provides misleading information, fails to meet milestones, or poses a threat to consumers or financial stability. It may also compel a participant to halt certain activities, change directors, restrict customer access or take any action deemed necessary in the public interest.
Participants themselves may also withdraw, but only after proving that all outstanding obligations to customers have been cleared.
Graduation: What Happens After the Sandbox
If a test succeeds, companies may be offered one of three outcomes: a licence or authorisation to operate, a regulatory waiver or no-objection to proceed, or initiation of amendments to financial legislation to accommodate the innovation. These pathways indicate the Bank’s intention to use the sandbox as both a testing environment and a policy-shaping tool.
If a test fails, the participant must exit without disrupting customers and provide full disclosure of lessons learned.
A New Era for Botswana’s Digital Finance Landscape
With these guidelines, Botswana joins a growing number of African and global regulators turning to controlled experimentation to manage fintech growth. The framework not only opens space for novel solutions, ranging from digital payments and lending platforms to new data-driven financial services, but also positions the central bank as an active collaborator in innovation.
For startups long frustrated by stringent licensing hurdles and regulatory ambiguity, the sandbox could mark a turning point. Yet the Bank’s messaging is clear: openness to innovation will be matched by uncompromising oversight to protect consumers and preserve financial stability.