FASTEST GROWING COMPANY CHASED OUT OF KENYA

The CEO of B2B commerce startup Wasoko, formerly known as SokoWatch, is relocating from Nairobi, Kenya to the island of Zanzibar along with a majority of the company’s developers. Wasoko is helming Zanzibar’s new plan to attract major tech firms dubbed Silicon Zanzibar.

CEO Daniel Yu announced on Wednesday, August 31 that he had already moved to Zanzibar – revealing that he looked forward to scaling up their new ‘Tech HQ’ on the island. He expressed confidence that more tech firms would relocate to the country.

Wasoko was valued at $625 million after closing a $125 million Series B round in March. The firm was in May ranked as Africa’s fastest growing company by the Financial Times. Wasoko grew its revenues from $0.3 million in 2017 to $27.4 million in 2020. The number of employees increased from 57 to 372 over the same period.

Operating in Kenya, Tanzania, Rwanda, Uganda, Ivory Coast and Senegal, Wasoko enables retailers to order goods from suppliers via SMS or its mobile app and have them quickly delivered to their shops and stores. It also offers working capital for retailers allowing them to keep their shops stocked.

Firms including Wasoko under the Silicon Zanzibar program will benefit from Zanzibar Free Economic Zone incentives including exemption from corporate tax for 10 years, work visas for relocating tech workers and availability of working space & accommodation at Fumba town, located 9km from Abeid Amani Karume International Airport.

“Wasoko is the founding private sector partner of Silicon Zanzibar, and we expect to invest over $10M into the island over the coming years as we scale up our new Tech HQ in Fumba Town. I myself have already personally relocated to Zanzibar alongside the majority of our technology team, and I am truly excited by the numerous other companies planning to open offices alongside us as well,” Yu shared online.

In Kenya, although global giants including Google, Microsoft and VISA have recently been setting up shop and helping drive growth of the ecosystem, the Finance Act 2022 doubled the Digital Service Tax (DST) targeting tech firms from 1.5% to 3% on the gross value of online transactions. This, in addition to the annual 30% corporate tax,  as well as excise tax and Capital Gains Tax – with the Finance Act 2022 also increasing the capital gains tax rate from 5% to 15%, effective January 2023 – is driving concern that increased taxation could derail Kenya’s steady growth as a continental leader in tech.

Yu observed in a new interview with Quartz that the the tax burden in Zanzibar was lighter than in Kenya.

“The tax rate is lower in Zanzibar, and there are better fiscal incentives. It is also easier to secure work and business visas compared to Nairobi,” he stated.