Progress bar
Insight

The growing geographic footprint of tech companies on the African continent

Insight 1 June 2021

The growing geographic footprint of tech companies on the African continent

While some companies continue to struggle with adapting to the calamity of Covid-19, technology companies are thriving. The technology industry is seizing the opportunity to embrace the virtual togetherness of people around the world and continue to expand beyond frontiers and the African continent is a natural target for many reasons.

Silicon Valley in Africa

While some companies continue to struggle with adapting to the calamity of Covid-19, technology companies are thriving. Zoom for example, saw sales soar by a staggering 319% in 2020 as opposed to the same period in 2019. The recent expansion of technology giants on the African continent confirms the pandemic-proof status of these companies.

Even though de-globalisation seems to be the new norm with the world retreating itself from global economic integration, the technology industry is seizing the opportunity to embrace the virtual togetherness of people around the world. With the goods’ supply chain coming to an almost complete halt, technology companies continue to expand beyond frontiers and the African continent is a natural target for many reasons.

Mauritius, a thriving island located in the Indian Ocean has been long known for its ability to leapfrog, whether in the mobile connectivity era or the use of clean power projects, and together with the African continent, Mauritius is more than ready to welcome international tech companies. In a continent where doctors and banks are not readily accessible, individuals seize the opportunity to grapple at the first digital option. According to statista.com , in 2020, the internet penetration rate in Africa stood at 39.3%, that roughly translates to four out of each 10 individuals in the continent use the internet. Many experts are of the opinion that internet usage in continental Africa will increase to 50% by 2025. The great promise held by these figures is probably what caused the spate of recent announcements. Firstly, Twitter officialised the setting up of its African Headquarters in Ghana, and more recently, Amazon proclaimed its intention to anchor its regional offices in South Africa.

The impact of these international players on the continent is non-negligible. It is widely reported that the construction project where Amazon will be based will attract over 5, 000 jobs during the construction phase and up to 19, 000 indirect and induced jobs. Twitter’s physical presence in Africa will bring public conversation to the next level, while at the same time connecting young talent in the technology space. The human capital demands created by these companies will inevitably have a direct link in upscaling the education system. The knowhow and expertise brought by these companies will positively contribute to the social economic environment of the continent. Such transformation provides a revolutionary new path to catching up with living standards of the developed world.

What is striking is that the choice of South Africa for Amazon’s African headquarters attracted little attention worldwide. It appears that South Africa was a natural choice given the previous experience that the tech giant shares with the country. Essentially, the company has opted for a proven and tested route. In 2017, “Quartz Africa” found that Fortune 500 companies are still hesitant about settling in Africa despite South Africa being flaunted as the destination of choice for these companies. Twitter setting up shop in Ghana may have come as a surprise for many; snubbing Nigeria in the process, generally considered as the Tech Hub for the continent. There are few lessons we can learn from the Twitter move.

Setting up its HQ in Ghana may very well be a matter of internal policy for Twitter, however, one cannot overlook the fact that the size of the economy or the market reach were not determining factors in the decision making process. According to statista.com, half of the population in Nigeria, approximately 100 million, are internet users. This is in sharp contrast to the internet users in Ghana which is approximately 15 million according to the same source. The regulatory framework and policies have been commented on by many experts as being a key determining factor. The customary ‘ease of doing business’ ranking as published by the World Bank does not do justice to this argument - Ghana is currently ranked 118th out of 290 countries. Ghana, over the last few years, has created the right ecosystem to attract foreign entities such as Twitter. The job done by its policy makers should also be commended, for the strategy combining optimum use of media coverage has created the right image for attracting foreign investments and has indeed paid off. In fact, Twitter also commented that the hosting of the HQ for the African Continental Free Trade Area also cemented Ghana as a leading player on the continent to attract international business.

Ghana’s case study provides an interesting outlook for Mauritius as the country has been tagged as the gateway for Africa, and has gained popularity through its stellar ease of doing business rankings coupled with the right physical infrastructure, reliable local talent pool and widely attractive Government incentives and policies. The next logical question is then whether Mauritius will position itself as a destination of choice for African Headquarters for these types of technology companies.

Many companies may disregard Mauritius given its economic size and population, however, the country is blessed with the continent’s most highly professional and qualifies pool of talent which is underpinned by its solid education system. The recent years have also seen a new form of talent erosion; international mobility. In their quest to service their growing economy, countries such as Luxembourg, Jersey and Guernsey have been actively sending their top head hunters to scout for talent in Mauritius. In a move to remedy the brain drain, the Mauritian Government has incentivised professionals via attractive benefits to return to the country.

Mauritius is ranked 13th according to the World Bank’s for ease of doing business which is well ahead of South Africa (84th) and Ghana (113th) in its 2020 report. It is also recognised as an international jurisdiction of repute and is home to an important number of international banks, legal firms, corporate services, investment funds and private equity firms. Policy makers encourage dialogues with the industry and are quick to respond to the international exigencies by taking swift action where required.

From a regulatory perspective, Mauritius has launched a global headquarters licence to strengthen the position of Mauritius as a financial and business hub for Africa. A holder of this license can take advantage of an eight-year tax holiday and numerous benefits of operating from the jurisdiction.

It may be slightly presumptuous for Mauritius to consider attracting these giant technology companies at this stage given the track record of other African countries, however, Mauritius is well positioned to host start-up to medium-sized companies which are looking for a well-established, proven and tested jurisdiction to host their African Headquarters. The favourable time zone coupled with the low cost of operating in the jurisdiction should be a factor to consider. The Mauritius Government in 2018 had facilitated the setting up of the Mauritius African Fintech Hub with the objective to promote Mauritius as the Fintech Innovation Hub for the African continent. Such initiatives reiterate the Government’s intention to attract technology companies in the country.

The untapped market for technology companies provides significant opportunities in the future. Data centres and internet connectivity are right behind the doors and it is expected that more companies will be following the footsteps of Amazon and Twitter by turning to the continent. What remains clear is that Mauritius is the hidden gem from the array of locations. The recent move of Twitter has redistributed the cards on the continent and many of the rejected suitors for Twitter are busy revisiting their policies to ensure they don’t miss the next big opportunity. Mauritius is a strong contender to become the next popular jurisdiction of choice.

How can Sanne assist?

The rapid evolution of technology through innovations such as Artificial Intelligence and blockchain has proved to be one of the greatest disruptions in the global financial sector over the past years. Sanne can provide assistance in setting up your company in Mauritius and we are available to answer any of your questions regarding the jurisdiction.

  • Assistance in the legal, tax and regulatory requirements in Mauritius
  • Close support in acquiring the relevant licences in Mauritius
  • Setting up your Company
  • Sourcing the necessary human resource and local infrastructure

For more information on how Sanne can assist you, please reach out to Zoubeir or Rubina directly.

Let’s talk….

Our Mauritius service offering
Background image
Rubina Toorawa Head of Sanne Mauritius - Mauritius
Card link - Go to a specific page
Swiper Scrollbar