Mauritius, the "tropical paradise", attempts to build a blockchain center, and the "regulatory sandbox license" allows blockchain to be unhindered by regulation

The East African island nation of Mauritius, known for its lush tropical beaches, the world’s second-oldest horse racetrack and the now-extinct dodo bird, is seeking to establish itself as a regional haven for blockchain innovation.

Since independence in 1968, the former Dutch, French and British colony has become one of the most successful economies in the region by building a hub for technology and financial services. Now, Mauritius is using blockchain as a catalyst to strengthen its competitive advantage and drive continued innovation at home.

Atma Narasiah, board member and head of technology, innovation and services at Mauritius’ investment promotion agency, Investment Mauritius, said:

“We are trying to take our economy to another level and these technologies are very important in our strategy.”

“Blockchain is an area of ​​focus for us, and we will build blockchain competitiveness to ensure it penetrates other economic sectors and government departments.”

The island nation has well-established financial services and information and communications technology industries, and it seems a logical next step for it to attract investors and entrepreneurs in blockchain and financial technology.

Narasiah said:

“Blockchain is one of the technologies we want to develop and we see this as an opportunity to leapfrog other countries.”

Open Invitation

In its bid to establish itself as the Indian Ocean’s blockchain hub, Mauritius has publicly called on innovators to take advantage of the country’s newly issued Regulatory Sandbox License (RSL).

Sandboxes allow companies operating in sectors such as finance, healthcare and communications technology to begin operations in the absence of a formal legislative or licensing framework.

Narasiah said:

“For years we have been receiving innovative projects (proposals), but they have not been able to operate due to the lack of a regulatory framework. We have a good legal system, but as technology shifts, we have not been able to keep pace with regulation.”

He added:

“So we are coming up with a Regulatory Sandbox License (RSL) to facilitate these projects.”

Australia, Singapore, the UK and Hong Kong have followed suit, with RSL open to all innovators but focused on attracting innovators across all blockchain verticals.

It is expected that the project completion will help promote domestic and cross-border trade and eventually expand to the smart city concept connected to other central cities.

Since its launch in November 2016, the RSL has approved 11 project proposals, the majority of which are in the financial technology sector.

To obtain approval, applicants must demonstrate that their project is innovative and beneficial to the Mauritian economy, but cannot be accommodated in the investor’s home jurisdiction due to lack of legislation or regulation. After providing all relevant information and properly addressing risks, qualified applicants can obtain a license in as little as 30 days.

The main force in the region

So, why should blockchain investors consider setting up a company in Mauritius?

Narasiah noted that the country has what is internationally recognized as the strongest business and governance environment in sub-Saharan Africa.

According to the World Bank’s annual “Doing Business” survey, Mauritius has the best business environment in the region and ranks 49th out of 190 countries worldwide. The World Bank’s ranking takes into account factors such as the ease of setting up a company, enforcing contracts, getting credit, protecting investors and paying taxes.

The World Economic Forum said in its annual competitiveness ranking that Mauritius has the most competitive economy, the best infrastructure and the most educated workforce in Africa.

Narasiah also highlighted the country’s growing communications infrastructure, including a project to roll out free Wi-Fi across the island and install fiber-optic connections in every residence – as a major drawcard for technology investors.

A bridge to a wider market

This stability, along with its location, makes Mauritius a popular country for setting up financial services companies looking to enter new markets on the African continent – ​​home to the world’s largest unbanked population.

“Many African governments want to emulate Mauritius, so if a system is proven to work in Mauritius, it gives you assurance and credibility when rolling out this solution in the African market,” Narasiah said.

He added:

“Having a successful operation in Mauritius can accelerate your expansion across Africa.

Mauritius also has a bilingual workforce that speaks English and French — two lingua franca on the continent — and has tax treaties with more than 20 African countries, including South Africa, Zambia, Uganda and Rwanda.

The island nation also maintains close cultural and economic ties with India, a $2 trillion economy that is expected to surpass China as the world’s most populous country in the next decade.

About two-thirds of Mauritians are of Indian descent and Mauritius has been the largest source of foreign direct investment to India in recent years due to favorable double tax avoidance rules between the two countries.