More than ten years ago, fintech startup Paga was looking for the best African country to headquarter in. Its home country, Nigeria, was a big turn-off. In 2009 when the company was formed, the country was performing poorly across all the key ease of doing business indexes. In fact that year, the World Bank placed it 118th out of 180 countries globally on the ease of doing business ranking (it was 13th in Africa). And so, coupled with having one of the highest corporate tax rates in Africa (30%), and the fact that investors in African startups were still few and skeptical then about where their money went to, the choice of Nigeria as the headquarters of Paga was discarded. In its place, was a tiny island, Mauritius, located off the coast of East Africa, with a population of barely 1.2 million.

Apart from the fact the Mauritius was where Paga’s first investor (Goodwell Investments BV) was headquartered in Africa (and so the choice was only natural for ease of investments), that year the country ranked 24th in the world on the ease of doing business index, and first in Africa. 

But Paga was lucky. As at 2009, the regulation of fintech companies in Africa was still at the infancy. Mauritius only began to legislate on a national payment system in 2018 following the enactment of the National Payment Systems Act. Before then, fintech startups in Mauritius had relied on a regulatory sandbox licensing regime introduced in the Investment Promotion Act of 2016. The sandbox license, however, only allowed them to test their products and services, and no more. The extent to which they could scale their businesses under the license was, therefore, hugely limited.

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However, with the recent introduction of the National Payment Systems (Authorisation and Licensing) Regulations in the small island nation, it is safe to say that the era of piggy-backing on a sandbox license to run fintech operations in the country is over. 

But How Will Foreign Fintech Companies Cope Under The New Regulations? 

First, it is important to point out that a lot of things have changed, including that there are now wider options for African fintech companies looking for countries to headquarter their operations in— Paga has even re-headquartered away from Mauritius to the UK. 

Nevertheless, Mauritius remains a country of choice for African fintech startups looking to reduce regulatory risks associated with maintaining legal presence in only one country. 

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To get any electronic payments license in Mauritius under the new regulations, the foreign company can either be a local company registered in Mauritius, or a foreign company setting up a local fintech branch. 

All the law requires is that the company makes application to the Bank of Mauritius, the country’s central bank, for a licence to either act as a payment service provider, or operate a payment system, clearing system or settlement system in Mauritius. 

But there are more to it, and they would be considered accordingly. 

How Many Days Does It Take To Procure The License?

60 days from the receipt of a complete documentation. However, the central bank is required to get back to the applicant within 30 days from the receipt of an application, for the applicant to supply any outstanding documents or information. 

What Are The Requirements For Obtaining The License?

To be able to obtain any of the category of the licenses, the fintech company must fulfil the following key requirements:

• The fintech company must have a place in Mauritius where it runs its business from, and must maintain a staff according to its size.

• If the fintech company is registered in Mauritius, it must have a board of at least three directors (not a corporate director). One of the directors must be appointed as an independent director. 

• If the fintech company is a foreign-registered company only launching a branch in Mauritius, it can appoint only a representative (and not a board of directors). However, approval of Bank of Mauritius must be first sought.

• The fintech company must also maintain the minimum capital expected of its license category.

• It must also put in place, an anti-money laundering and combatting the financing of terrorism and proliferation transaction monitoring system. 

For more details on the documents to submit to obtain the license, click here (.pdf). 

Can The License Be Revoked Once Granted? 

Yes. The Bank of Mauritius can revoke the fintech license, in many circumstances, including if the company: 

• fails to start a business within six months of receiving the license.

• fails to abide by the terms and conditions of the license as well as any other relevant law. 

• ceases to operate the business for which it has been given a license.

• has been convicted of any offence related to money laundering or terrorism.

• is a branch of a foreign-registered company that no longer has a license, or registration in the country where it was founded.

• no longer has a physical presence in Mauritius, or if the Mauritian branch is registered outside of Mauritius, no longer has a physical presence in the country in which it is registered.

Note: The company must also renew the license every year upon paying the prescribed fees.

Are There Any Other Things Special About The Regulations?

Yes. Under the regulations, a license may be issued to a fintech company for the issuance of digital currency, provided that:

• the provision of the digital currency does not include the provision of credit facilities to customers.

• the amounts collected and put in the trust account for each digital currency holder are traceable.

• digital currency is issued on receipt of funds for amount exactly equal to the monetary value offered, etc. 

For more details on the license generally, click here (.pdf).

Fintech license Mauritius Fintech license Mauritius

S/N	TYPE OF LICENSES	Minimum Capital Requirement (In Mauritian Rupee)
1	For a payment service provider to provide the following payment service – (a) services enabling cash to be placed on a payment account, including all operations required for operating a payment account (b) services enabling cash withdrawal from a payment account, including all operations required for operating a payment account (c) execution of payment transactions, including transfers of funds on a payment account with the payment service provider of the user or with another payment service provider, including the execution of direct debits and one-off direct debit payment transactions through a payment card or a similar device credit transfers and standing orders (d) execution of payment transactions where the funds are covered by a credit line for a payment service user, including the execution of – (i) direct debits and one-off direct debits (ii) payment transactions through a payment card or a similar device credit transfers and standing orders (e) issue of payment instruments and/or acquiring of payment transaction	5 million (US$121k)
2	(f) money remittance (g) payment initiation services	3 million (US$73k)
3	(h) account information services	1 million (US$24k)
4	(i) any other services functional to the transfer of money, including the issuance of electronic money and electronic money instruments, but excluding the provision of solely online or telecommunication services or network access, of which –   (i) small e-money issuer (ii) large e-money issuer (iii) other services	3 million (US$73k) 5 million (US$121k) Will vary according to nature and size of business and will be specified by the central bank by notice to the applicant
5	For an operator of – a payment system; a clearing system; or a settlement system	50 million (US$1.2m)

Why Did Nigerian Pioneer Fintech Company Paga Headquarter Away From Mauritius To The UK?

Charles Rapulu Udoh

Charles Rapulu Udoh is a Lagos-based lawyer who has advised startups across Africa on issues such as startup funding (Venture Capital, Debt financing, private equity, angel investing etc), taxation, strategies, etc. He also has special focus on the protection of business or brands’ intellectual property rights ( such as trademark, patent or design) across Africa and other foreign jurisdictions.
He is well versed on issues of ESG (sustainability), media and entertainment law, corporate finance and governance.
He is also an award-winning write