Zanzibar has established a blockchain sandbox program called the National Blockchain Sandbox, which allows startups to experiment with innovative technologies before scaling them. It was developed by LedgerFi IT Solutions and is powered by the XinFin Powering XDC Network.
Purpose and Benefits of the Sandbox
The goal of the sandbox is to help startups test their technology solutions while positioning Zanzibar as a bedrock for innovation. The sandbox provides a safe environment with advanced security for experimenting within the National Blockchain Network.
In the words of Seif Said, Director General of the e-Government Authority of Zanzibar, “The primary objective is to create a conducive environment for the development of cutting edge technologies including Blockchain, AI, and other emerging technologies.”
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According to the government of Zanzibar, the sandbox is open to all startups. However, priority will be given to those offering solutions in financial inclusion, identity verification, and certification issuance, which aligns with Zanzibar’s broader goal of digital transformation.
Seif then mentioned that Zanzibar will wholly collaborate with startups that can help the country to achieve its digitization goals.
In his words, “Innovators will have the opportunities to work on pilot projects, collaborate with experts, and receive mentorship from industry leaders, which is very critical.”
More opportunities were mentioned for these startups; the startups who develop broadly beneficial solutions will qualify for training and incubator programs, helping them improve their technical skills. They may also receive government support to enhance their competitiveness and expand into other markets.
Generally, founders who want to expand across Africa often face difficulties, including determining the right strategies for new markets and dealing with regulatory challenges. This is something that sandboxes can help them navigate.
Also, sandboxes can help bridge the gap between the government and the private sector. The government would get a better understanding of new technologies, and the startups would learn how to operate within regulatory frameworks, possibly even appreciating their necessity; a win-win for all.
Moreso, by reducing risk, sandboxes can attract more venture capital funding. Investors prefer startups that can not only innovate but also function and scale up effectively in the market.
According to a 2023 study by Deloitte, startups in sandboxes reduced their time-to-market by 30% on average since they are compelled to regularly iterate and improve their products. As a result, they had a higher chance of surviving in the market.
What You Should Know
In August, the Bank of Tanzania introduced a sandbox regulation framework to reduce the regulatory burdens for financial startups, which was praised by stakeholders. This shows a growing trend of sandboxes in Africa.
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