Why I Moved to Mauritius to Launch My First Start-Up
It’s not just for the beaches and low taxes
I’ve seen first-hand how the business culture, government policies and other factors of a country can impact the speed, efficiency and effectiveness of nonprofit and for-profit business operations. So when it came down to picking a country to register my own first company, into which I’d be sinking my own savings and attracting investments from friends and family, I wanted to make sure I set myself up for success from the beginning as much as possible.
For background: after college, I spent 7 years learning the ropes and helping others build and scale their social enterprises across West Africa, East Africa and Southern Africa. During this time, several coaching engagements opened my eyes to the positive impact that 1-on-1 coaching can have on a rising leader. When exploring the current level of use and the availability of qualified coaches across much of the continent, I became convinced that this is an under-utilized tool for talent development in what will soon be the world’s largest workforce. My experience taught me that having a professional coach regularly holds you accountable and helps you reflect on important topics such as your business decisions, leadership style, productivity level, and team dynamics. This can be a key factor in driving both your business and personal career growth, and is especially true for coaches who understand the context of their coachee’s market and workplace context, without being actually affiliated with their company.
With this motivation in hand, I felt that it was finally time to launch my own venture. (Turning 30 years old also seemed to give me extra motivation.) The start-up I’m building, CoffeeChat, aims to play a role in dramatically increasing the use of coaching in Africa by making it more affordable, accessible, and locally contextualized. It has been designed to be a full-service marketplace that let’s individuals (sponsored or self-paid) and businesses to search for, contract, pay and review coaches and consultants for their professional development services.
Given that focus, and recent commentary (and rebuttal) about what really constitutes an “African” start-up, I wanted to make sure my company would be based on the continent and use African talent and resources as much as possible. After a few months of research and consideration while still working in my previous job, I decided to move forward with Mauritius, beating out the alternatives of Rwanda and South Africa.
Here are the major reasons why I chose Mauritius:
Top of the List: Overall Stability and Investor Confidence
On paper, Mauritius wins hands down. Despite being a small island nation of less than 2 million people, it punches above its weight on the global economic stage. As an upper middle income country in a region with mostly lower income countries, it predictably earns top marks among African nations for almost all forms of rankings.
Here’s a run-through: the well-known Ease of Doing Business index may not be perfect, but I’ve always felt it is likely a good directional indicator. For that, Mauritius is an easy bet. In 2019, it is ranked 20th globally overall (and 1st in Africa), and 6th globally under the Paying Taxes category. To bolster these rankings, in the newly published report “Global Markets Complexity Index” from Wilson Perumal & Company, Mauritius was also labeled the top-performing country in Africa, coming under the label of a “utility player” for having low complexity across all market, operational and regulatory indicators — in the same group as countries such as Canada, Ireland, Israel and South Korea. To drive the point home even further, the 2019 Fragile States Index named Mauritius the only “Very Stable Country” in all of Africa. Even the Ibrahim Index of African Governance consistently ranks Mauritius #1 in Africa across each of its four pillars.
Beyond rankings, other signs point to a solid and stable economy. In 2018, the Chinese President Xi Jinping chose Mauritius as just one of four country stops during his Africa trip that year, likely to support the completion of a Mauritius-China free trade agreement and given the significant Chinese ethnic presence on the island. Mauritius participates in several regional trade blocs, including COMESA and SADC, which brings benefits related to the flow of goods and capital in Eastern and Southern Africa — while also maintaining strong trade volumes with France, India, China and South Africa. The country has traditionally been driven mostly by its sugar cane, textiles and tourism industries, but the offshore wealth industry has begun to overshadow them during the past 15 years in regards to its massive foreign direct investment flows.
Small Island, Big Dreams: Up-and-Coming Entrepreneurial Ecosystem
Despite all of its top rankings, Mauritius isn’t really know for its start-up scene (yet). Meanwhile, the Nigeria, South Africa, Kenya and Rwanda start-up scenes are each making strides in promoting their larger entrepreneurship ecosystems. Sometimes bigger can be better, but unlike other startup hubs outside of Africa, these cities don’t yet seem to come without the matching benefits of massive tech talent pools and angel investor networks. Those that are developing sizable talent pools often find themselves victims of brain drain (though this is up for debate). As it can be easier to use a distributed (remote) tech team, I’ve been using a team of freelancers from Tunga to build my MVP so location wasn’t relevant anyway.
Other hubs also have larger addressable markets surrounding them. This allows entrepreneurs to more easily go meet and engage with customers face-to-face, an important part of early-stage product iterations. This is especially crucial if in-person observation is needed for user experience with your product or service (think farmer technology products or last-mile healthcare delivery). In my case, Mauritius itself is not necessarily the target market, as I’m typically asking coaches and experts from across the continent to engage with companies and individuals online to schedule mentorship and advisory calls. My user research will be mostly virtual, so it won’t be a disadvantage.
For times where I might actually want to engage large groups of prospective customers, this will likely require attendance at regional conferences across the continent. Given that Mauritius is a small island in the middle of the Indian Ocean, it’s a surprisingly good base with its major airport offering daily flights to many destinations across Africa, Europe, the Middle East and Asia. However, round-trip flight costs will be slightly higher, in the range of $400–800 when traveling to the major African hubs such as Addis, Nairobi, Kigali, and Johannesburg, rather than the $300–500 range if I had been based instead in South Africa or Rwanda.
For me, I’d rather embrace an ecosystem where there are strategic opportunities on the table, without a massive onslaught of competition for those resources. Here are three promising perspectives that stand out to me about Mauritius’ appeal of being an up-and-coming start-up hub:
- No Man is an Island: Given the island’s size, there are a good number of professional co-working spaces and incubators available, which are great office space and networking resources. I have visited several of them (including Turbine, Hive, and FastHub) which host a range of individual entrepreneurs and small business teams. There are also a number of creative and entrepreneurship consulting agencies active on the island, such as Lakaz D’art and Red Dot.
- Playing in the Sand: On the policy side, the government had the openness and foresight back in 2016 to grant Regulatory Sandbox Licenses to encourage experimentation and investment in the cryptocurrency sector. This is a promising sign for its ability to quickly embrace new technology and change. The government continues to support the Mauritius Africa FinTech Hub and also recently recognized digital assets, which includes cryptocurrency, in its bid to be a leader in the pan-African financial ecosystem. In fact, any company operating in a new unregulated field can apply for a similar type of temporary licence.
- Home of the “Harvard of Africa”: This year, Fast Company recognized Fred Swaniker’s African Leadership University (ALU) in its “World’s 50 Most Innovative Companies”, the only African company to make the list. Students choose “missions, not majors” and undergo an innovative learning curriculum. Needless to say, this institution, which is part of the wider African Leadership Group, already has and will continue to have an outsized influence on the future of education and work. Their first college campus is located in Mauritius, with high-potential students coming from across the continent to attend. To try to tap into this growing force, I’ve already selected an ALU student intern to work for my startup beginning next month, and hope that the ALU staff and talent will continue to positively influence the Mauritius start-up scene.
Oui, Yes: Everyone Can Speak English and French
As a native English speaker myself, it’s very convenient both practically and socially to know that everyone in Mauritius can speak both English and French fluently. There are also obviously great business advantages.
Among the 1.2 billion people living Africa, about 700 million people speak English and another 90 million speak French. This means that if you have a bilingual team in Mauritius building a pan-African business, you can automatically communicate with ⅔ of your market. A number of successful outsourcing firms such as Talenteum, while at first primarily focusing on the market in France, have now begun to service a growing demand from firms pursuing pan-African expansion.
Who Can Argue with a Melting Pot of People, Beaches, Waterfalls and Hiking?
Launching a start-up can be a major grind, so finding a place where you can achieve personal sustainability is important. Let me play the role of local tourism promoter for a moment:
1.4 million tourists (more than its resident population) visited Mauritius in 2018 for a reason. It’s a scenic island with beautiful beaches, all-inclusive resorts, luxurious villas, and endless water sports. There are also a variety of national parks for day-long hiking and safe, well-kept roads. The tourism industry continues to grow, with nearly 14,000 additional new hotel rooms added last year alone. Not to mention the 300+ properties listed on Airbnb, seven of which I explored during my first two months there. Despite the tourist effect, local prices remain reasonable.
For me, Mauritius represents more than just a paradise destination, as it has a lot more character than a typical resort island. It is a real melting pot of cultures; there are a blend of multi-generational ethnicities ranging from Indian, African, Chinese, and European — with about two-thirds coming from Indian descent. This means that you can see plenty of places of worship in each town, a range of public holidays that produce parades and family outings at the public beaches, and many fusions of local cuisine to enjoy.
Open Invitation: Starting a Business as a Foreigner
In Mauritius, a business can be 100% foreign owned. This may seem simple, but is a very important consideration. This means that a foreign individual or company can bring money into the country to invest and operate a new business without the requirement of having a national co-founder or co-owner. There are very few countries that actually allow for this. Only recently did a number of Middle Eastern hubs take this step to attract more investment. On top of that, there is no repatriation tax, meaning if that same person or company were to want to remove the ongoing profits or after a liquidity event, the only tax that would come into play would be from the other country where it would be headed, such as a US repatriation tax.
And Yes, There are Very Low Taxes
Historically a significant amount of investment into Africa was channeled through Mauritius because of its favourable tax structure. Its “GBC2” licence type was an efficient way for multinationals to shift profits to low-tax jurisdictions and also avoid double taxation. However, after much pressure from the OECD and various bad press about dubious practices (leading to near-zero effective tax rates and an erosion of over $100 billion in tax revenue across poor countries), the government instituted a reform in 2018 to wind down the most lenient structure type, removing many of the loopholes that were giving it a bad name.
Now only the Global Business Licence program remains, which still aims to be a competitive offering to companies operating regionally or globally. Highlights of the Global Business Licence include a 15% corporate tax rate and 0% capital gains tax. For employees residing within the country, there is a flat 15% personal income tax, along with a string of potential tax reductions based on eligibility. This compares against most other African countries using between 25–35% rates for both corporate and income tax.
During my first few months living in Mauritius, many locals, after realizing I wasn’t just a two-week tourist, tended to ask me, “So why have you come here to start your business?” I’d proceed to give them a nuanced list of the reasons (a concise version of the above points) and explain how it was a good fit for the business model I was pursuing. Not convinced, if listening at all, they would retort, “and for the taxes, right?” as if this was the sole reason anyone would come to the island for business. I hope I’ve started to make a more well-rounded case for Mauritius as an investment, innovation and lifestyle destination.
Looking Forward
As I continue to pursue business and live in Mauritius, I will likely realize that the island is not as perfect as it might seem from the outside, since economic growth typically comes with growing pains. For example, the World Bank released a report in 2018 identifying growing inequality among its workforce, citing that strong wage gains were mostly among its growing ICT and Finance sectors, which has yet to create a large number of local jobs. In response, the Mauritian Prime Minister wrote an op-ed piece for the Financial Times, highlighting that 37 years of continuous growth had transformed its economy from a “single commodity, colonial and low income economy to a well-diversified economy and an upper middle income country.” He also outlined a number of current and future investments that he expected would further transform his nation into a high income country with a strong welfare support system in place to ensure inclusiveness.
I’m excited to be in Mauritius, joining in on its growth journey as an international hub. I’ve only spent a few months here so far, but I look forward to continuing to learn more about what Mauritius has to offer. I suppose that only after I write a review after launching, operating and (potentially) selling a business in Mauritius will I be able to give the full story — I’ll make sure to follow up when that time comes!
