A Tale of Two Destinies – Mauritius and FinTech in Africa

In the words of the Mauritius Africa FinTech Hub (MAFH), it was a very special Tech Thursday on 03 October 2019. It not only marked their 1 year anniversary but also the day they rolled out the results of the FinTech Survey – an exercise which began on 15th August, and on which I reported here (‘Startup Communities in Africa: Has the movement gained ground?), with great excitement and high hopes for a brighter FinTech future.

MAFH matters

Caption: Michal Szymanski, CEO, MAFH thanks the stakeholders of the MAFH ecosystem (Picture Credit: MAFH)

So, first up, how has MAFH fared over the last year as an innovation hub for FinTech startups in Mauritius and Africa? As it turns out, for such a young startup, they haven’t done badly at all – in the span of just one year, they’ve gone from 12 members to 38, engaged with 26 ecosystems (from 1!) and hosted 843 people at 18 MAFH events!

But, at least to my mind, more importantly than anything else, they have pioneered the FinTech space in Mauritius in terms of mapping the ecosystem and giving voice to all those startups, regulators, universities, accelerators, business service providers, and investors, that have been tirelessly supporting this space for the last few years. 

Most excitingly for me as a tech journalist and FinTech follower, during the anniversary event, the media too emerged as an important stakeholder that helped give much needed coverage to the mapping project and the MAFH’s efforts in coordination with PwC – itself a MAFH member – to launch the results of the first-ever FinTech survey in Mauritius.

FinTech Footprint…

Caption (L to R): Elli Yiannakaris (Acting Head of Marketing at the MAFH) and Diya Guttoo (Senior Manager, PwC Mauritius) present the results of the Mauritius FinTech Ecosystem and Start-Up Mapping Exercise (Picture Credit: MAFH)

As the MAFH celebrated its one year anniversary by launching the first Mauritius FinTech Ecosystem Maps, it became clear that while the maps showed a vibrant and growing ecosystem, there were also sobering insights into the teething experience and enormous challenges of FinTech startups. 

In a nutshell, regulatory challenges continue to be the foremost obstacle for startups; while finding skills and talent feature next based on survey results as another major challenge, rounded up by lack of market data and few funding options being expressed as other key constraints to the growth of FinTech startups in Mauritius. 

At the same time, these challenges are set off by opportunities such as Mauritius offering the best business environment in Sub-Saharan Africa (SSA) based on the World Bank’s Ease of Doing Business (EoDB) report, which ranks Mauritius globally at 20th place out of 190 countries world-wide, and 1st in the regional rankings for SSA. 

Also, based on the processed responses of 19 FinTech players with 29% being in the startup phase, 19% each being in seed, expansion and growth stage and only 14% in the nascent concept/idea stage, it emerges that 57% have been able to raise funds, US$ 500k is the average amount of funding raised, 55 is the average number of employees for those in stages beyond a startup phase, while 12 is the average number of employees for those in concept/idea and startup stages. Finally, as expected, turnover thresholds are low for the young startup space in Mauritius, with only 9% each having revenues in excess of MUR 250 mn (equivalent to US$ 6.9 mn) or from MUR 50 (around US$ 1.4 mn) to MUR 250 mn while an overwhelming majority (60%) have revenues ranging from MUR 0 to MUR 6 mn (approximately US$ 170k) and another 22% have revenues in the range of MUR 6 mn to MUR 50 mn.

In startup speak, it is Market Access (to Africa), followed by Ease of Doing Business, followed by its optimal offshore location and finally, favourable IP and tax laws that are their primary reasons for incorporating a business in Mauritius. Also, as a sobering reality check against the World Bank ranking on the EoDB report, critical aspects constituting ease of doing business, such as opening a bank account, continue to be teething issues for FinTech startups, with survey results revealing that the shortest it took was 2 weeks and the longest, 6 months!   

This is not to say that the ecosystem is not robust, but that there must be a concerted effort, now more than ever, to support the startups based on their challenges expressed in their own voice – and in large numbers. Indeed, it is the stakeholders’ response to these requests for support, as well as the startups’ capacity and willingness to take up the support extended to them, that will in large part determine the effectiveness of the mapping project, as the key outcome sought from this crucial endeavour. 

For more insights into what the maps meant for the FinTech ecosystem for startups in Mauritius – and Africa – you can check out these insightful sets of infographics on the Mauritius FinTech Ecosystem 2019 and the Mauritius FinTech Startup Map 2019.

Mauritius FinTech Ecosystem 2019:

Mauritius FinTech Start-Ups 2019:

….and beyond

Last but not the least, I would like to highlight that this fascinating and insightful event took place at the historic Cern Docks. It is incidentally housed in a location that also plays host to the UNESCO World Heritage site of the Aapravasi Ghat – the landmark venue for a ‘great experiment’ conceptualised in 1834 by the then-British government in the use of ‘free’ labour to replace slaves. Will the Mauritius Africa FinTech Hub, which has relocated close to the Cern Docks for its own premises featuring a co-working space for FinTech startups, be able to join the dots between a stride in history featuring freedom for slaves and a stellar future for FinTech featuring free minds that embrace innovation? 

Only time will tell if this, the greatest experiment of them all, will succeed. All we can say with certainly for now is that this mapping project and the seeds of hope it has sown for innovation in Mauritius will indeed determine the destinies of two crucial stakeholders – the island economy itself and the fate of Fintech in Africa…

Caption: Mr Fran?ois Guibert, CEO of the Economic Development Board, outlines the Top Ten reasons to foray into FinTech in Africa (Picture Credit: MAFH)