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How Mauritius is the missing link for Africa-India's rising start-ups

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How Mauritius is the missing link for Africa-India's rising start-ups

As Africa and India scale up efforts to work together in a burgeoning start-up ecosphere, Mauritius could provide the missing link in this collaboration, says Mahen Govinda, Ocorian Regional Head of Client Services and a panel speaker at the recent Africa-India Entrepreneurship and Investment Forum (AIEIF) in Mauritius.

For many years, traditional investments channeled to emerging markets in Asia and Africa have made Mauritius a hot spot amongst investors. However, a new trend may be in the making as Mauritius positions itself favorably on the Africa-India corridor for start-up capital.

This year's edition of AIEIF pictured the island as a natural connecting point for technopreneurs of both Africa and India, providing them with a space of cultural neutrality. In my view, the pivotal role Mauritius can play goes beyond the ecosystem it has to nurture start-ups and ensure they grow in value. It is also about what the country can do to bridge opportunities and entrepreneurship along this promising Africa-India corridor. In this endeavour, Mauritius as a country culturally close to both India and Africa has an unmatched advantage.

Why is an Africa-India corridor relevant?

The idea that India and Africa will benefit from synergies on start-up initiatives stems from the commonalities they both share. Firstly, they face similar developmental challenges, with a large portion of their population employed in traditional sectors such as agriculture or living off informal jobs. Marketwise, the total GDP of Africa is about that of India. They also have roughly the same population. More importantly, the entrepreneurial-spirited Indian will find in the like-minded African someone he can go into business with.

These similarities are the foundation stones on which start-up initiatives can grow, especially in the tech-driven areas of mobile applications, AI and Fintech, and addressing a wide spectrum of challenges.

In the promotion of a level playing field between India and Africa, angel investors on both sides have a key role. Not only to bring in much needed finance – often from syndicated sources – but they also contribute in terms of knowledge and network, hence further bridging the technological divide. Both Africa and India may also face the same constraint when it comes to the minimum investment ticket size required to attract venture capitalists.

Despite what they have in common, in the area of start-up funding India is far better off than Africa. India’s start-up ecosystem attracted some $10.5 billion in 2018, compared with around $725 million for African startups. However, increasing institutional support as well as rising appetite of angel investors lately for Africa could narrow the mismatch. The World Economic Forum has recently launched the Africa Growth Platform to help the continent’s community of start-up enterprises grow and compete in international markets.

Japan has also come to the fore in support of Africa's sustainable development. Just in August, the seventh Tokyo International Conference on African Development pledged to focus on investments in innovation and technology. A staple of economic collaboration, bilateral partnership agreements between countries are also making their way into the tech world, as seen with the likes of Alibaba’s plans to help Ethiopia boost its digital economy.

Mauritius, the missing link in Africa-India start-up cooperation

While opportunities for collaboration between Africa and Asia abound in the start-up space, so far few success stories have come to fruition, more from the absence of an enabling platform than lack of vision.

Mauritius, on the back of its historical, cultural and political links with both India and Africa is a natural fit to act as a launch pad for Indian start-ups to indigenize applications for Africa as much as for African technopreneurs bringing their innovation to India. For instance, an area of application is that of African-born mobile money deployed in today’s cashless India. In the agricultural sector, the potential for relevant indigenization is also huge, with growers in India and Africa facing similar climatic challenges.

In the years to come, one can expect Mauritius will play a growing role in providing the space for such indigenization as well as facilitating start-up and angel investing from India to Africa and vice versa. There is already a number of areas where Mauritius can be useful, namely in protecting IP rights, structuring joint venture agreements and in securing finance.

In the meantime, riding on the technology and innovation wave, the Enterprise Development Board of Mauritius has come up with a Regulatory Sandbox License to cater for technology-driven applications that do not fall under any current legal framework. To follow suit, the banking sector is coming up with breakthrough financing mechanisms in the likes of the State Bank of Mauritius with its Technology Investment Fund.

Over the years, Mauritius has become the preferred platform for Private Equity to Africa. Is it now destined to become the facilitator of choice for start-up investments between Africa and India? Many are hopeful, including Mr. Baljinder Sharma, the initiator and promoter of the AIEIF who moved from India to Mauritius to avail of opportunities in Africa.  

Our geographical and cultural proximity to both India and Africa have been instrumental in our role to help companies grow in the emerging markets of Africa and Asia. With decades of experience, Ocorian helps start-ups to structure, grow and increase their enterprise value. View our full range of market entry & expansion services here.

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