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    Hype vs. Reality: Can Mauritania Be Different with Its New Startup Act?

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    Mauritania, a vast North African nation where over 75% of the land is desert, has set its sights on becoming a surprise player in the African startup scene. On January 7, 2024, President Mohamed Ould Cheikh El Ghazouani signed the “Startup Act,” believed to be the fastest enacted startup legislation in Africa.

    This move positions Mauritania alongside other African nations like Tunisia, Senegal, Nigeria, and Congo who have embraced Startup Acts in recent years. Industry observers, however, question the necessity of such a law in a country with a nascent startup ecosystem and limited traction with tech investors.

    The Startup Act aims to cultivate a robust digital entrepreneurship and innovation environment within Mauritania. It envisions a future where the country fosters companies with high growth potential, driven by creativity and leveraging new technologies.

    The Startup Label: A Gateway to Perks

    The Act establishes a “Startup Label” awarded to companies in Mauritania meeting specific criteria, including:

    • Local Roots: Legal establishment in Mauritania
    • Early Stage: Limited operational history (defined by decree)
    • Size Matters: Workforce, balance sheet, and turnover thresholds (defined by decree)
    • Homegrown Focus: Majority Mauritanian ownership (at least 50%)
    • High-Growth Potential: Demonstrating a promising business model
    • Tech-Savvy: Offering innovative products or services, particularly those with a technological focus.

    The Act also includes provisions to encourage participation from female, young, and disabled entrepreneurs, as well as those in rural areas.

    To ensure the effective implementation of the Startup Act, a Labeling Technical Committee has been established under the Ministry of Digital Technology in Mauritania. Comprising representatives from both public and private sectors with expertise in finance, innovation, and technology, this committee oversees the granting and renewal of Startup and Support Structure labels. Furthermore, a dedicated digital platform serves as a centralized hub for startups and support structures, streamlining registration, labeling processes, and information dissemination.

    Labeled Startups and Support Structures: Benefits and Responsibilities

    Labeled startups enjoy advantages like:

    • Customs Relief:: Exemption from certain import duties and taxes on equipment for a set installation period.
    • Tax Break: Exemption from business license fees, income tax on profits (for up to three years, potentially renewable), reduced flat-rate tax on income (for up to three years, potentially renewable), exemption from minimum tax (for up to three years, potentially renewable), tax credit for research and development, and accelerated depreciation of assets.
    • Public Procurement Boost: Support measures for easier participation in government procurement processes.
    • Financial Access: The government encourages banks and financial institutions to offer labeled startups preferential access to financing through guarantee mechanisms and tailored financial products.
    • Collaboration and Visibility: The state promotes collaboration between universities, research institutions, and labeled startups for innovative research and development projects. Additionally, it supports the visibility of labeled startups and their offerings through participation in trade fairs and events.

    Labeled startups also have responsibilities, including adhering to regulations, maintaining resources to ensure sustainable operations, and providing annual reports on activities, results, and the impact of their programs.

    Support Structures: A Crucial Ecosystem Component

    The Act recognizes the importance of support structures for startups. The “Support Structure Label”, valid for five (5) years, is awarded to entities providing workspaces, training, advice, and financing to startups and innovative project leaders. Labeled support structures benefit from specific advantages and play a vital role in animating the startup ecosystem.

    Building the Ecosystem: Challenges and Opportunities

    Despite a small population of 4.7 million, Mauritania is making strides to establish a vibrant startup community and attract venture capital. The “ Startup Act ” and collaborations like the Innovation Hub, spearheaded by Maurinvest-Maurilog, Bpifrance, and Bond’innov, represent significant progress.

    “We’re seeing a surge of innovation across French-speaking countries,” says Ninon Duval, Director of Bond’innov, a local player in Mauritania’s evolving ecosystem. “While incubators have laid the groundwork for years, there’s much to learn. We aim to contribute by integrating Mauritanian talent into global dynamics and fostering international investment.”

    While the promises of Africa’s existing Startup Acts are plentiful, concrete results have been mixed. Only time will tell if Mauritania can overcome these challenges and become a serious contender in Africa’s burgeoning startup scene. This ambitious commitment to innovation has the potential to transform the desert landscape into a breeding ground for future technological success.

    Charles Rapulu Udoh is a Lagos-based lawyer, who has several years of experience working in Africa’s burgeoning tech startup industry. He has closed multi-million dollar deals bordering on venture capital, private equity, intellectual property (trademark, patent or design, etc.), mergers and acquisitions, in countries such as in the Delaware, New York, UK, Singapore, British Virgin Islands, South Africa, Nigeria etc. He’s also a corporate governance and cross-border data privacy and tax expert. As an award-winning writer and researcher, he is passionate about telling the African startup story, and is one of the continent’s pioneers in this regard.

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