In recent years, Mauritius has gained a growing global reputation as the preferred gateway for investment into Africa. The Government of Mauritius has also recognised that the digital revolution presents an opportunity for smaller economies, like that of Mauritius, to leapfrog traditional industrial development. Accordingly, Mauritius is now looking to position itself as the FinTech hub for Africa.

Fintech is essentially technology that is applied to financial services, or transaction operations in businesses. Fintech has over the last few years moved from back-end data centers to embrace comprehensive transaction processing systems – often involving emerging tech such as artificial intelligence, blockchain, and robotic process automation – including services offered via the cloud.

Blockchain is essentially defined as an open, distributed ledger that can record transactions between two parties efficiently and in a verifiable and permanent way. Cryptocurrencies are digital assets designed to work as a medium of exchange using strong cryptography to secure financial transactions, control the creation of additional units and verify the transfer of assets. Blockchain is the technology behind most cryptocurrencies. Digital currency exchanges, on the other hand, act as a means of facilitating the exchange of cryptocurrency for alternative cryptocurrencies, or fiat currency.

Globally, there has been a significant increase in the interest in blockchain and digital assets – notably Bitcoin and other select cryptocurrencies. Whilst there are both proponents and sceptics of cryptocurrencies, the blockchain technology itself is widely regarded as disruptive with multiple beneficial use cases.
Fintech in Mauritius
Mauritius is aiming to become a hub for African Fintech. Much of this is provided by the stable regulatory and financial environment that has been forged over the last couple of decades. This includes the bilateral treaties for tax, reciprocity and protection of investments, as well as the bilingual, educated workforce that has developed in the financial services sector.  Mauritius has set up the Mauritius Africa Fintech Hub, the Regulatory Sandbox Licence, has accepted digital assets including cryptocurrency as assets and even allows Security Token Offerings (STO).

The Mauritius Regulatory Sandbox Licence
The Regulatory Sandbox Licence was created to enable innovative businesses to exist where there is no current legal or regulatory framework. It is run in Mauritius through the Economic Development Board, and allows companies to start, in a well-defined and controlled manner allowing the authorities to understand it and either work to draft new legislation or find another way to keep innovation alive.

The Digital Custodian Licence
The Custodian Services (Digital Asset) Licence was enabled in 2019 to create a licence for those who want to store digital assets on another’s behalf. The Financial Services (Custodian Services (Digital Assets)) Rules 2019 came into operation in March 2019. Most of us are familiar with the role of a Custodian and this simply allows the licencee to offer the facility to hold digital assets. In a September 2018 Guidance Note the FSC has recognised digital assets as an asset class for sophisticated and expert investors.

Peer-to-peer Lending Rules
After the Digital Assets Custodian licence, the Mauritius Financial Services Authority (FSC) on 14 August 2020 issued the Financial Services (Peer to Peer Lending) Rules 2020; The P2P Lending Rules provide for a Sound and efficient regulatory environment to support the offer and execution of stakeholders in the non-banking financial services sector of Mauritius. Under these rules, a Peer-to-Peer operator facilitates access to finance by matching borrowers and lenders on its online platform.

Security Token Offerings
Since digital assets are deemed Securities, it follows that a Security Token Offering is regulated in Mauritius by the Securities Act. Thanks to Guidance Notes issued by the FSC, Securities Token Offerings and Security Token Trading Systems are both permitted and provided for and this is another string to the bow for FinTech in Mauritius.
In conclusion, FinTech provides new ways for people to access life-changing services, which many other markets take for granted, such as banking and insurance. The Fintech sector in Sub-Saharan Africa is predicted to grow from USD 200M to USD 3Bn in the incoming years with 58% of the world mobile money accounts registered in the region.