UK emerges as key base for African tech firms, report finds

The United Kingdom (UK) is emerging as a major destination for African technology companies, offering not only corporate registration but also operational support, regulatory licensing and access to customers, a new report by TLP Advisory has found.

The report, ‘Home and Away: Tracking African Tech’s Global Footprint’, the firm’s third annual research, examined 100 technology companies across Nigeria, Kenya, South Africa, Egypt, Ghana and Morocco to understand why they establish business affiliations with the UK, United States and United Arab Emirates (UAE).

It found that while the U.S is primarily associated with financing-related incorporation and the UAE serves largely as an operational base for accessing the Middle East, the UK combines corporate establishment with a broader commercial presence.

According to the report, 84 per cent of African technology companies with UK affiliations are incorporated there while 47 per cent have operational presence and 19 per cent hold regulatory licences.

In comparison, only three per cent of US-affiliated companies and four per cent of UAE-affiliated firms hold regulatory licences.

Speaking at the report’s launch, Co-Founder and Partner of TLP Advisory, Odunoluwa Longe, said most African technology companies maintained legal structures abroad alongside their home-country operations.

“What’ is striking about the UK is how often it comes with more than only incorporation. It comes with licences, teams on the ground and customers”, she said.

Longe said founders needed to be deliberate about their objectives in different markets and build the necessary networks, partnerships and commercial relationships to translate international presence into business growth.

The report also identified the UAE as an important destination, particularly for companies seeking operational access to markets across the Mid dle East, Africa and Asia.

It found that 87 per cent of UAE-affiliated companies have operational presence in the country, making it the most operationally focused of the three markets examined.

The UAE’s appeal, according to the report, is supported by established financial and trade networks as well as free zones and financial centres that provide opportunities for foreign businesses to establish local operations.

Egyptian technology companies recorded particularly strong connections with the UAE, with 70 per cent having affiliations with the country compared with 50 per cent with the United States.

The report attributed this trend partly to geographical proximity and shared language and cultural ties.

Founder and Chief Executive Officer,Flutterwave, Olugbenga Agboola, said Africa remained the company’s home because it understood the continent’s challenges and had its customers there.

However, he noted that expanding a business of such scale require access to capital, talent and opportunities beyond the continent.

For African fintech companies, the UK offers access to an established market and a sizeable African diaspora with existing cross-border financial connections.

The report cited research indicating that 40 per cent of UK residents born in Sub-Saharan Africa send money abroad, compared with 27 per cent of all UK residents born overseas.

Founder and Chief Executive Officer, South African fintech company, Float, Alex Forsyth-Thompson, said the UK’s familiar business culture, convenient time difference and sizeable South African community made it an attractive market.

He also cited the country’s fintech environment and more than 55 million credit card accounts as factors supporting the company’s expansion.

Beyond market access and diaspora connections, the report identified four factors strengthening the UK’s appeal to African technology companies.

These include early-stage investment incentives through the Seed Enterprise Investment Scheme and Enterprise Investment Scheme, which offer tax relief to eligible investors in qualifying businesses.

Others are the Global Entrepreneur Programme, which provides a government endorsement route for the Innovator Founder visa, the familiarity of English common law in international commercial transactions and access to established capital markets through the London Stock Exchange and Alternative Investment Market.

Head of Middle East and Africa, Primary Markets at the London Stock Exchange, Abi Ajayi, said London offered African founders access to different categories of investors, including specialist emerging-market funds, frontier-market investors, sovereign wealth funds and mainstream institutions.

Similarly, the Director of Trade and Investment for Africa at the UK Department for Business, Innovation, Science and Trade, said the success of the relationship should be measured by the partnerships, jobs, customers and capital generated rather than the number of African companies establishing legal presence in the country.

Founded in 2014 by Longe and Funkola Odeleye as The Longe Practice, TLP Advisory described itself as Africa’s first startup-focused law firm.