Startups off to Silicon Zanzibar

*This article was written by Seth Onyango, Bird Story Agency

Zanzibar, famed for its world-class tourism offerings, is gearing up for new tenants as startups seek success in the semi-autonomous island’s burgeoning tech space.

In August, the archipelago signed Kenyan e-commerce firm Wasoko as Silicon Zanzibar’s anchor tenant, setting the stage for new entrants.

And more recently, Pando DAO, a community of top tech founders in Africa, has partnered with Silicon Zanzibar to transform the island into a hub for tech talent and businesses.

Panda DAO’s 70 founders, representing 49 companies across Africa, could help transform the Indian Ocean archipelago into a vibrant technology melting pot. Companies include mPharma, Pariti, Africa Health Holdings, Stitch, Marketforce, 54Gene, Mara, VertoFX, Turaco, Raise, Carry1st and Jetstream, Wasoko and others.

The founders’ startups are currently valued at more than $2 billion and have collectively raised over $500 million in capital.

How will it work

Panda DOA will work with the island’s authorities to open operations and create a policy framework to support innovation and the digital economy in Zanzibar.

The arrival of Wasoko – named Africa’s fastest-growing company by the Financial Times in May – is a key vote in favor of Zanzibar’s public-private initiative to attract tech companies.

After closing a $125 million Series B round in March, Wasako is valued at $625 million, growing its earnings from $300,000 in 2017 to $27.4 million in the year 2020, while the number of employees increased from 57 to 372 in the same period.

Ramani, a fintech disruptor building infrastructure to enable trade in Africa, has also been listed on Silicon Zanzibar.

It offers mobile and web applications to give Africa’s micro-merchants quick and easy access to SME financing, and integrates brands to offer resellers 30-day stock terms.

Tushop, a Nairobi-based social commerce platform that enables group shopping of fast-moving consumer goods (FMCGs), has also set up a warehouse in Zanzibar.

In March, it raised $3 million in pre-seed funding in a round led by 4DX Ventures to expand services in Nairobi.

In its latest analysis, startup tracker Africa: The Big Deal says Zanzibar could shape an East African unicorn.

“With Wasoko on board, Silicon Zanzibar will have the right to brag about one of Africa’s non-fintech unicorns; There were expectations that the startup would become Kenya‘s first tech unicorn,” it said.

“But no, thanks to Kenya’s dissuasively high taxes, the country may have to wait a little longer to coin its first billion-dollar startup.”

Some incentives for startups to come to Silicon Zanzibar

To attract tech companies, Zanzibar is issuing work visas to relocate tech workers, which has been problematic in mature markets like Nigeria, Kenya, Egypt and South Africa.

Other incentives in the Zanzibar Free Economic Zone include corporate tax exemption for 10 years.

Relocating companies can also find available work space and accommodation in Fumba Town, a new modern eco-town which is situated along a 1.5km long coastline just 9km from Abeid Amani Karume International Airport.

“Silicon Zanzibar is re-establishing the island as a gateway to the African continent through the transformative potential of the technology industry. As part of Zanzibar’s Blue Economy master plan to promote sustainable development, the technology sector will play a crucial role in expanding the island’s economy while maintaining a low environmental footprint,” reads part of Silicon Zanzibar’s website.

“With direct flights to over 20 key destinations in Africa, Europe and the Middle East, and fiber optic internet around the island, Zanzibar’s infrastructure is firmly in place to keep you connected.”

But even as start-ups flock to Zanzibar, the island needs to boost household income and create demand for tech financial services.

For now, however, the island could well become the launch pad and headquarters for some of Africa’s biggest tech companies.