Mauritius has a sophisticated financial services industry and a vibrant ICT sector. It is increasingly well placed to take advantage of the opportunities FinTech brings for both Africa and the rest of the world.
Suyash Sumaroo is a Mauritian-based FinTech entrepreneur. Suyash is CEO of Codevigor and Horizon Africa. Codevigor is now the leading blockchain-based company in Mauritius and was the first to launch a commercial blockchain solution in the Indian Ocean. Along with being a pioneer in blockchain technology, Codevigor is also involved in setting up other FinTech solutions. A member of the Mauritius Africa FinTech Hub and currently doing significant work in non-fungible tokens (NFTs), Suyash is well-placed to give us an insight into the country’s burgeoning FinTech sector.
How has the regulatory landscape developed?
"In 2014, when we started Codevigor, the regulatory side of things was not so advanced. We had regulations, but it was for more traditional stuff. With the advent of cryptocurrencies, our regulators such as the Financial Services Commission (FSC) have become more involved in regulations, particularly in the blockchain/crypto sector. The regulations are catching up on previously unregulated sectors as new guidelines are being introduced all the time, including on crowdfunding. This is not necessarily a good thing for FinTech businesses – for example, if a start-up needs a Custodian Services (Digital Asset) license, the license fees are high and potentially prohibitive. It is good that they are setting up these frameworks, however, it can potentially stifle innovation."
What is the focus right now?
"The primary concern is Anti-Money Laundering (AML), and it is the predominant reason our government is seeking to get on top of these technologies. Mauritius was added to the European Union’s revised list of high-risk countries that have “strategic deficiencies in their anti-money laundering and counter-terrorist financing frameworks” on 7 May 2020. Since this, Mauritius is striving to reassure investors and has sought to get on top of anything that could relate to AML and fraud. As such, cryptocurrencies are one of their main considerations. It is likely that, because of this, the regulatory framework against money laundering and terrorist financing for both banking and non-banking financial services will be harmonised and updated in line with the perpetually evolving developments in FinTech."
What are the regulations like for businesses operating in the space? Is there confusion?
"It’s not confusing per se. In fact, one of the good things about Mauritius’ regulators is that they have been very open, even though they are a little out of their depth, like many when it comes to FinTech. They invited multiple actors in the FinTech space to educate them about cryptocurrencies so they could be better informed when enacting frameworks. On the downside… they don’t always listen to what we have to say."
How has this impacted your business?
"As a smaller start-up, the regulations don’t really apply, and smaller companies are agile and ahead of the curve. By the time the regulations catch up, we and in fact, the ecosystem more generally, has moved on. As a start-up, we steer clear of anything that would require us to set up a license or a custodian license (which is approximately USD20 000!). As a start-up, it is extremely difficult to get funding, let alone in the crypto or blockchain space – people won’t touch you. Therefore, we steer clear of companies that would require us to have any of these licenses. Generally, we avoid any elements of either crypto or blockchain that require a license right now. For example, we are currently focused on NFTs and have just launched an NFT platform – it’s in the FinTech sector, but it’s not regulated in Mauritius."
What about bigger companies?
"The bigger companies are often slower to get ahead of the innovation curve. They usually have to apply for licenses. I think the main challenge for international companies currently is not necessarily the regulations – we have a fairly clear framework, even if it is not hugely developed, and if you stay within that, you will be okay. Depending on your activity, it is the more practical issue of setting up a bank account in Mauritius that poses a challenge. You must have one to operate in the country, however, it is really hard to get one – largely due to AML challenges. In fact, it is the banks that are not so open to giving financial facilities to FinTech companies, particularly those in the crypto space. Even most of the local start-ups have problems, and we have been very vocal about this. Hopefully, this is going to change – particularly as the government is seeking to push investment in the crypto sector. Practically, this will be difficult in this context."
How important are hubs to building the ecosystem and to businesses in the sector?
"The hubs are definitely very important, especially in countries like Mauritius. The Mauritian culture is not very attractive for start-ups, particularly in the tech sector. These hubs and associations create a bridge between what is happening in the region and what people are doing in Mauritius. The Mauritius Africa FinTech Hub is two and a half years old and has made a huge amount of progress."
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How are other countries doing?
- Check out the state of FinTech across Africa;
- Read our case study on Nigeria;
- Read our report, incl. the major regulatory trends we are seeing across the continent.