Fintech
Fintech is essentially technology that is applied to Financial Services or transaction operations in businesses. Fintech companies are relevant because they provide services that can be used by individuals and businesses to streamline financial actions.
Fintech is creating a lot of opportunity for investors and consumers, who can now move money around or gain access to investments that might have been too intimidating before. It’s given consumers more confidence in managing their finances and helped businesses streamline processes. While there is so risk to investing within the industry, it still looks to have plenty of opportunity for many years to come.
Additional Info
Fintech in Mauritius
Mauritius as an international financial centre and growing Fintech hub is among the first countries in the Eastern and Southern African region which adopted a comprehensive legislation on virtual assets (VAs) and initial token offerings (ITOs) by way of the Virtual Asset and Initial Token Offerings Services Act 2021 (Act).
On 10 September 2021, The Financial Services Commission of Mauritius (FSC) released the Financial Services (Crowdfunding) rules to create a new regulatory framework for crowdfunding, in line with its strategy to sustain the growth of the Fintech ecosystem within the Mauritius International Financial Centre.
On 7 February 2022, the much-awaited Virtual Asset and Initial Token Offering Services Act (the “Act”) came into force. This innovative Act is very promising in establishing Mauritius as an attractive location to invest in virtual assets and virtual tokens. The Act aims to provide a regulatory framework, aligned with international standards and best practices, to promote business activities for service providers dealing with virtual assets and initial token offerings, within a safe, secure and regulated environment.
With a healthy, well-established legal system, favourable tax rate, fast internet connection and respected financial regulatory authorities, Mauritius has the right mix to power FinTech growth in Africa.
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.
Fintech Activities
Peer-to-Peer
Lending Peer-to-peer lending (P2P) connect borrowers and lenders without the need of traditional banks. They act as online intermediaries. P2P is a rapid and evolving industry. It is beneficial for companies since they do not have to have high costs. Borrowers have the benefit of relatively low interest rates and lenders benefit from high return.
Mobile Wallet
Mobile wallet is a virtual wallet that contains personal payment data on a mobile phone. This is beneficial and practical to any person to make a payment without cash. This allows digital payment. It is claimed to be more secure and faster. Examples of mobile wallet are Apple pay, Android pay and Samsung pay.
Blockchain
Blockchain is a type of database. It collects data which are reserved electronically on a computer or laptop. Blockchain is meant to record information which can be used later and shared. It is decentralized, transparent and provides data integrity. The records are connected and are known as blocks in a single list known as chain. This forms the word Blockchain. Blockchain is considered as one of the greatest developments of fintech. Using blockchain makes transactions less costly and more rapid as compared to traditional banking system.
Cryptocurrency
Cryptocurrency is a digital or electronic money which can be used to make payments or transfers using computers. Cryptocurrency is used as an intermediary where a person’s coin ownership records are kept in ledger form in a computer to record, secure, control and verify transactions of coin ownership. It is a non-tangible item. The main cryptocurrency is Bitcoin. It was invented in 2008 by an unidentified name Satoshi Nakamota. It is the first decentralized cryptocurrency. Bitcoin allows payments for trading and deals. It is rapid, cheaper and no transaction cost is involved.
Crowdfunding
Crowdfunding is a way to finance a business or venture by assembling little sum of money from bigger number of people online. Funding is easier and faster when using crowdfunding.