High earners on an income of 1.5million USD in G7 countries pay over 60% more in income tax than those in BRIC economies, according to new research by UHY International, the international accountancy network*.

For individuals earning 1.5 million USD per annum in the G7, they pay on average 719,751 USD in tax (47.9% effective tax rate) compared with 446,883 USD in tax (29.8% effective tax rate) in BRIC countries.

UHY says G7 countries risk losing out on substantial tax receipts if their tax regimes become uncompetitive for wealthy individuals and they look to relocate their businesses to lower-tax jurisdictions, taking jobs and economic growth with them.

G7 countries including France, Canada the US and UK, have all recently taken measures to reduce or withdraw top rate tax bands imposed following the financial crisis. In 2014 for example, France’s rate of 45.8% (on a $1.5m income), was substantially higher than the current rate of 40.0%. In 2014, the French government also decided to scrap the country’s 75% marginal rate on incomes above €1 million.

The new British Prime Minister, Boris Johnson, said during his campaign for Conservative party leader, that he would cut taxes for higher earners by raising the 40% income tax threshold from 50,000 GBP to 80,000 GBP.

Outside the G7 and BRIC countries, other emerging economies continue to offer some of the most generous tax regimes to high earners**. In Nigeria and Pakistan for instance, those earning 1.5million USD, would pay just 19% and 25% income tax respectively.

Out of all the countries studied, Russia had the lowest income tax rate, where all tax payers, including high earners, pay just 13% income tax.

Denmark taxes individuals earning 1.5 million USD, over half of their income – 53.2% in total – ranking the highest among the 30 countries studied, followed by Japan, The Netherlands, Canada and Ireland.

Denmark’s high taxes are used to pay for the Danish welfare system, where higher education and healthcare are free for all citizens. The Danish welfare model also provides young families with long periods of parental leave (up to 52 weeks) and inexpensive childcare facilities.

UHY says another reason why the income tax burden on employees in Denmark is high is because the vast majority of social security contributions are borne by the employee rather than the employer. In other countries, such as Sweden and France, more of the social security costs are shifted onto the employer.

Lower income taxpayers

For lower income taxpayers earning 25,000 USD, there is almost no difference between the amount of tax paid among the G7 and BRIC countries. A taxpayer earning 25,000 USD in a G7 country would pay 16.5% income tax on earnings, compared to 16.4% for a worker in a BRIC economy.

Emerging economies average a tax rate of 23.5% on a 25,000 USD income, far in excess of the 16.5% average among the G7 or the 19.2% average in Europe**. This reflects the lower average cost of living in BRIC economies compared with in the G7.

There are signs, however, that some emerging economies are moving towards lower income tax rates for lower incomes as they grow. In China for example the effective rate for individuals earning 25,000 USD has been cut substantially over the last five years – when UHY last studied taxation of income, the tax rate for an individual earning 25,000 USD stood at 10.8% compared with just 5.1% today.

Rick David, Chairman of UHY International, says: “Taxes on the top earners residing in G7 economies have eased off slightly since the changes imposed after the financial crisis.”

“Many Western European governments are still concerned though that their jurisdictions may become uncompetitive given the low tax rates in other developing jurisdictions so a number of countries have now taken steps to reduce their top rate of tax.”

“However as developing countries mature and their middle classes expand, governments may decide to increase their marginal rates of tax on higher earners to meet greater demand for public services. This is beginning to happen in Asian countries such as India and China which have gradually been taxing higher incomes more and lower incomes less.”

“Over time, as the population of developing countries becomes wealthier, this tax disparity between the G7 and BRIC economies could reduce.”

*UHY studied tax data in 30 countries across its international network. The study captured the ‘take home pay’ for low (25,000 USD), middle (250,000 USD) and high income workers (1,500,000 USD), taking into account personal taxes and social security contributions.  The calculations are based on a single, unmarried taxpayer with no children.

**Emerging economies studied included Russia, China, Romania, Zambia, Uruguay, India, Vietnam, The Philippines, Poland, Argentina, Pakistan and Nigeria

Ranked by amount of tax to the government in percentage

For lower income taxpayers earning US$25,000, there is almost no difference between the amount of tax paid among the G7 and BRIC country averages

*UHY studied tax data in 30 countries across its international network. The study captured the ‘take home pay’ for low (25,000 USD), middle (250,000 USD) and high income workers (1,500,000 USD), taking into account personal taxes and social security contributions.  The calculations are based on a single, unmarried taxpayer with no children.

Notes for Editors

UHY global press contact: Dominique Maeremans on +44 20 7767 2621

Email: d.maeremans@uhy.com – www.uhy.com

Nick Mattison or Alex Williams

Mattison Public Relations

+44 20 7645 3636, +44 779 320 7325 or email: alex.williams@mattison.co.uk

About UHY

Established in 1986 and based in London, UK, UHY is a leading network of independent audit, accounting, tax and consulting firms with offices in over 300 major business centres across 100 countries.

Our staff members, over 8,200 strong, are proud to be part of the 16th largest international accounting and consultancy network. Each member of UHY is a legally separate and independent firm. For further information on UHY please go to www.uhy.com.

UHY is a member of the Forum of Firms, an association of international networks of accounting firms. For additional information on the Forum of Firms, visit www.forumoffirms.org

New member firm in Bosnia and Herzegovina joins the UHY network

We welcome, Revident d.o.o., our new member firm in Bosnia and Herzegovina to the global accountancy network UHY, extending our coverage within Europe. The firm is in the process of adopting the UHY branding and will soon be known as UHY Revident d.o.o.

Established in 2006, the firm’s main office is based in Mostar with further offices in Grude and Sarajevo.  The team brings wide-ranging experience in audit, advisory, corporate finance and tax services to a portfolio of domestic and international clients primarily represented in the art & entertainment, hospitality, manufacturing, mining & quarrying and retail sectors.

Senior partner, Božo Vukoja comments: “Being part of the UHY global network underpins our commitment to deliver quality services and enhances the services and advice we can offer our clients. The global presence of the network combined with the expertise and knowledge shared among UHY’s 8,200 colleagues around the world, not only strengthens our own capabilities, locally and internationally, but also these of our current and potential clients and their operations.”

Rick David, chairman of UHY comments: “We are delighted to welcome Revident d.o.o. to the UHY network. Bosnia and Herzegovina, is embarking on a new growth model and continues to embrace economic change including its impending membership of the European Union. Revident d.o.o.’s membership extends our footprint in the Europe and strengthens UHY’s regional market expertise and capabilities to serve our international clients who have business interests in this country and the wider region.”

UHY liaison office for Revident d.o.o

Contact: Matko Knezevic, +387 63  371  789, matko.knezevic@revident.ba W: www.revident.ba

Notes for Editors

UHY global press contact: Dominique Maeremans on +44 20 7767 2621

Email: d.maeremans@uhy.com – www.uhy.com

New member firm in Paraguay joins the UHY network

We welcome, Consultoria Integral Del MERCOSUR (CIME), our new member firm in Paraguay, to the global accountancy network UHY, extending our coverage within the Americas region. The firm is in the process of adopting the UHY branding and will soon be known as UHY Consultoría Integral Del MERCOSUR (UHY CIME).

Consultoría Integral Del MERCOSUR (CIME), was established in 2000. With a team of 26 staff and two partners, the firm is based in Coronel Oviedo, with additional offices in the capital city of Asunción, as well as in the cities of Villarrica and Ciudad del Este.  The team brings wide-ranging experience in audit, accounting, tax, insolvency and corporate recovery, corporate finance, management and IT consultancy to a portfolio of domestic and international clients.

Managing partner of Consultoría Integral Del MERCOSUR (CIME), Miguel Vera comments: “The UHY network’s collaboration, combined with the reputable UHY brand, will give our firm a competitive edge in Paraguay and the wider region. The global presence of the network combined with the expertise and knowledge of UHY’s 8,200 people around the world, not only strengthens our own capabilities, locally and internationally, but also these of our clients and their operations.  We look forward to elevating our business through a successful cooperation with other firms operating within the UHY network.”

Rick David, chairman of UHY comments: “We are delighted to welcome Consultoría Integral Del MERCOSUR (CIME) to the UHY network. Paraguay has economic advantages of a young population, strong agricultural industry combined with vast hydroelectric power generation capabilities.  Consultoria Integral Del MERCOSUR (CIME)’s membership extends our footprint in the Americas region and strengthens UHY’s regional market expertise and capabilities to serve our international clients who have a business presence in this country and the wider region.”

UHY liaison office for Consultoría Integral Del MERCOSUR (CIME)

Contact: Miguel Vera, on +595 521 202386, Email: cime@cime.com.py, W: www.cime.com.py

Notes for Editors

UHY global press contact: Dominique Maeremans on +44 20 7767 2621

Email: d.maeremans@uhy.com – www.uhy.com

New member firm in Egypt joins the UHY network

We welcome two full member firms to the global accountancy network UHY, extending our coverage within the Middle East region: United For Auditing, Tax, Advisory & Financial Services, and in Alexandria, Waled Mounir and Muhammad Arafa. The firms are in the process of adopting the UHY branding and will soon be known as UHY United For Auditing, Tax, Advisory & Financial Services and UHY Waled Mounir and Muhammad Arafa respectively.

Our Primary office in Egypt based in Cairo, United For Auditing, Tax, Advisory & Financial Services, with a team of 27 staff including four partners, previously partners with Big 4 audit firms, bring together over 30 years of professional and wide-ranging experience in audit, tax, advisory and transaction services to a portfolio of domestic and international clients primarily represented in the banking & financial services, construction, manufacturing, oil & gas and tourism sectors.

Managing partner, Nabil Istanbouli of United For Auditing, Tax, Advisory & Financial Services comments: “Being part of the UHY global network underpins our own values, commitment to deliver quality services and our vision of partnering with our clients to provide agile and practical solutions. We look forward to elevating our business through a successful cooperation with other member firms operating within Egypt and the wider UHY network.”

Based in Alexandria, Waled Mounir and Muhammad Arafa, established in 2013, brings further wide-ranging experience in audit, accounting, tax, insolvency and corporate recovery, corporate finance and consultancy services to a diverse portfolio of primarily clients represented in the construction, logistical solutions, shipping and transport sectors. The firm’s partners founded a not-for-profit organisation AAIA, an Association of Accountants and Internal Auditors, supporting companies in the Arab world with qualified accountants and internal auditors.

Managing partner, Waled Mounir of Waled Mounir and Muhammad Arafa comments: “We are committed to provide the necessary competitive resources to help our clients operate more efficiently in a global market place. The global presence of the network combined with the expertise and knowledge of UHY’s 8,100 colleagues around the world will also enhance those of our clients and their operations.”

Rick David, chairman of UHY comments: “Egypt as a country has seen many welcomed reforms recently to stabilize and strengthen its economic position driven by public investments, private consumption, and exports of goods and services. We are delighted to welcome to the UHY network two new member firms in Egypt,  equally enthusiastic, entrepreneurial and keen to join their efforts. The firms will greatly extend our footprint in the Middle Eastern region and strengthen UHY’s regional market expertise, enhance our values and capabilities to serve our international clients who have investments and a business presence in this country and the wider region.”

United For Auditing, Tax, Advisory & Financial Services

Contact: Ahmed Hegazy on +20 2 251 75598 Email: ahmed.hegazy@uhy-united.com W: www.uhy-united.com

Waled Mounir and Muhammad Arafa

Contact: Waled Mounir on +20 3 424 3371,waled.mounir@uhy-eg-alex.com, www.uhy-eg-alex.com

Notes for Editors

UHY global press contact: Dominique Maeremans on +44 20 7767 2621

Email: d.maeremans@uhy.com – www.uhy.com

The list of the top 750 family businesses globally released by family capital in 2019 has many familiar names with a long history of family ownership: US company Walmart, founded in 1945, ranks number one, with brands including Volkswagen (est. 1938), the Ford Motor Company (est. 1903), BMW (est. 1916) and Tata Sons Ltd (est. 1868) all ranking among the top ten.

According to family enterprise and wealth expert John Davis of MIT Sloan School of Management, many of the largest companies in any economy are family-owned. Not only that, but family companies tend to perform better and survive longer than those that are not family-owned. Whether large or small, they are ‘an ecosystem that underpins the economy,’ he says – one that is ‘set to grow even more important and influential in the years ahead’.

Around the world, family-owned businesses are not just important but fundamental economically. They make up over 85% of all companies in Spain, and 90% in Germany, driving both GDP and job growth. They generate over half of GDP in the UK, and in the United States (US) they employ 60% of the nation’s workforce and create 78% of all new jobs. In Japan, family-owned small and medium-sized enterprises (SMEs) account for up to 99% of all companies and employ up to 70% of the workforce.

But neither continued family ownership (or majority ownership) nor long-term survival is guaranteed. Among the many issues faced by family-owned businesses, succession planning is one of the most challenging.

The economic impact of family owned business is significant in terms of both their success and failure. But it seems that succession planning – perhaps key to long-term success – is not always high on the agenda.

“A decrease in the population overall and an increase in people living to older ages, means we are seeing a growing number of SME owners who are 70 years or older,” says Morito Saito, director and COO at UHY Fas, Tokyo, Japan. Business succession has been identified as an urgent issue in Japan, so much so that in 2017 the government’s agency for SMEs announced a five-year plan to help tackle issues around business succession.

Morito continues: “Approximately one third of all Japanese companies do not have a succession plan in place, and many companies go out of business because they cannot find suitable successors. Despite being home to some of the oldest family-owned businesses in the world, around 6.5 million jobs and JPY 22 trillion (over USD 198 billion) in GDP could be lost by 2025 if this trend continues.”

But the challenge is multifaceted, and family dynamics also come into play: “Each family needs to understand that they have a different role in the business – this may be in the management of the business, or they may remain involved as a silent partner,” says Morito.

The story is similar elsewhere. The Institute of Family Business in Spain recently described family businesses as ‘the backbone of the Spanish economy’, but reported that around 68% did not have formal succession plan. Similarly, despite contributing over 60% of GDP, a recent survey of family businesses in the US reported that only 23% had a ‘robust, documented business succession plan’.

Marilyn Pendergast, partner at US member firm UHY LLP in Albany, New York, counts a family business owned and managed by the fourth generation among her clients. She sees succession planning as critical for any business venture – but crucial for the survival of family businesses.

“It is a daunting challenge with many elements involved, and each business and each family will have different solutions,” says Marilyn.

Sometimes there is a clear candidate for taking over the management of the business; other times there may be multiple family members who believe they should inherit the business but do not necessarily have the skillsets or the work ethic to continue it successfully. Each business and each family will have different solutions.

At UHY LLP, Marilyn and her colleagues have taken a unique approach to the succession question: “One of the things we have done for family businesses is to run a succession planning workshop for all family members – those currently involved in the business, those who are not, and their spouses and partners – to provide a clear picture of what the alternatives may be, and to ensure that there are no unrealistic expectations.”

HISTORY AND LEGACY

In Poland, Adam Trawinski, head of the tax and legal department at UHY ECA Group in Warsaw, has a similar experience of the issues around succession: “Succession planning always requires a tailored approach, but it is difficult to lead a family through succession if a succession plan has not been implemented in advance – and, unfortunately, some businesses do not survive.”

However, Poland’s case with regard to family businesses also raises a rather different set of challenges. “Poland has always been an enterprising nation, but the opportunity to run even a small business during the communist era was limited,” says Adam. “Privately-owned businesses only started coming back into the country following the change of political system in the late 1980s.”

The number of family-owned businesses grew significantly from the early 1990s onwards, and as their founders reach retirement age they are now facing the issue of succession for the first time. But this is not the only challenge.

“Many of the businesses that were established at this time were small shops and workshops. Over time, and with the opportunities offered by Poland’s accession to the European Union, many of these have become larger entities that are now able to compete effectively in local and international markets. But while the owners focused on developing and growing their businesses, they did not always focus on ensuring that the formal side of things – the business structure – changed with it. We are finding now that we often need to combine succession planning with restructuring the business.”

FAMILY DYNAMICS

Bernard Fay has first-hand experience of working successfully alongside his brother Joseph as co-managing partners and co-chairs of UHY Fay and Co, Spain, for over 35 years. He also sees succession planning as fundamental to the success of a family business, but recognises the challenges of transition from generation to generation.

“The transition from first to second generation requires generosity and understanding on both sides,” says Bernard. “The founder must be prepared to cede power and accept that their successor will want to lead the business their own way; while the second generation must understand that the founder still has an important advisory role to play and ensure that they provide them with the economic security that allows them to step back.”

Bernard believes that the most risky transition occurs when family businesses are passed on from the second to the third generation – or the ‘generation of cousins’. “Around 80% of family-owned companies disappear at this stage, either through sale, merger or simply failure,” he says, the reason being that, at this stage, there is a risk of too many people becoming involved.

“The third generation usually needs to implement a policy of dividends,” says Bernard. “It is not possible for all family members to earn a living from the business, but as shareholders they need to receive a return. Looking after the wider family is important to avoid conflict.”

Andrew Timms, partner at UK member firm UHY Hacker Young in Nottingham, agrees. “One of the big issues to consider is that family businesses do not necessarily need to involve all the family. At some point, each family needs to go its own way and be financially in control of their own destiny. In the best scenarios, once the initial business is created and successful, wealth is also created outside of the businesses through other investments – at that point, it is more likely that, from generation to generation, wealth can be retained across the family. There is a different dynamic between creating the wealth and keeping the wealth.”

THE EXPERIENCE OF YOUTH

Of course, the notion of being in control of your own destiny has another impact on success and succession, as Johannes Bitzer, managing partner at Dr. Langenmayr und Partner mbB Wirtschaftsprüfer Rechtsanwälte Steuerberater in Munich, Germany, explains: “Succession planning is often hampered by the fact that it is now much less common for children to follow in their parents’ footsteps – they want to follow their own interests and go into other occupations.”

This is also seen elsewhere. “Even if they are running well, many family-owned companies in Japan go out of business because there is not a suitable successor,” says Morito Saito.

“The next generation does not always share the vision and interests of their forebears, despite a strong tradition of respect for elders and their values.”

But generational differences and the experience life and work outside of the family business can also bring benefits.

“Differences between generations in business have always been there – but what is new today is that, in general, the younger generations are much more savvy about technological innovations,” says Johannes. “For businesses, this is noticeable not only in IT and communications technology, but also in marketing and sales – the innovative use of new sales channels and marketing strategies is almost always initiated by the younger generation.”

“It is an incredibly good thing for the next generation to have worked for someone else, experienced a different environment, got some professional training and come into contact with a variety of external influence before coming into the family business,” says Andrew Timms.

Marilyn Pendergast agrees: “I see differences between older and younger generations as a positive factor for family-owned businesses – the important thing is that they are committed to the success of the business and are able to communicate openly and positively.”

“Businesses need to constantly adapt and grow in order to survive,” she adds. “New ideas are the spark which can keep the business relevant – and old dogs can be taught new tricks.”

That a family-owned business will remain under family control from generation to generation is far from a given. The issues around succession are complex and careful planning is essential. UHY member firms have a wealth of experience of working with family-owned businesses, often through successive generations, and understand the issues that can arise with areas such as succession planning.

Notes for Editors

UHY press contact: Dominique Maeremans on +44 20 7767 2621

Email: d.maeremans@uhy.com – www.uhy.com

African technology hubs are buzzing with startup activity, but a buoyant sector still has hurdles to overcome

In April this year, online retail marketplace Jumia became the first African technology startup to list on the New York Stock Exchange. The business – dubbed the African Amazon – boasts around 81,000 active sellers and operates in 14 African countries.

The historic listing caps a momentous couple of years for African technology companies. Tech startups broke funding records in 2018, securing USD 334.5 million in investment. More startups in more countries received more funding than ever before.

Tom Jackson, co-founder of Disrupt Africa, the company that compiles the figures, said: “Investment levels are not the only way of gauging the health of local ecosystems, but they are a valuable way of following the sector’s progress and demonstrate that, increasingly, if you have an innovative tech solution to a problem, with a strong business model, there are pathways to funding should you require it to scale.”

NIGERIA LEADS THE WAY

The overall figures remain modest compared to comparable statistics for Europe or North America, but they reveal a concentration of successful startups in a handful of countries. Nigeria has emerged as the most attractive hub for startup funding in Africa, with 58 startups raising a total of USD 95 million in investment in 2018. It is no coincidence that Jumia, along with a number of other major African technology companies, is headquartered in Nigeria.

Lawrence Etukakpan, head of business development at Nigerian member firm UHY Maaji, says the sector is an increasingly significant contributor to Nigerian prosperity.

“Technology companies are very important to the development of the Nigerian economy,” he says. “More technology hubs are being established in the country, giving hope for a knowledge economy and improved job opportunities. Technology innovation is seen as one way out of poverty. Today, technology contributes 11.81% to the GDP of the Nigerian economy,” Lawrence says.

The success of the sector meant that Nigeria was able to overtake South Africa as the top destination for tech startup investment in 2018, with Kenya making up a strong top three. But ‘Disrupt Africa’ notes that new tech startups are emerging across the continent, with Egypt an especially strong contender. Uganda, too, is enjoying a spike in startup activity. Last year the country became the beneficiary of International Trade Centre funds aimed at strengthening the competitiveness of micro, small and medium-sized enterprises in the country’s information and communications technology (ICT) sector.

“Tech hubs in Uganda have been growing in number for the past seven years, since the first tech hub, Hive Colab, was set up,” says Sameer Thakkar, CEO at UHY Thakkar & Associates in the country’s capital, Kampala. “A year later, another hub, WITU, focusing on empowering women entrepreneurs and technologists, also opened.”

That picture is not replicated everywhere in Africa’s large and diverse continent. Some nations have no real technology sector to speak of; others have technology sectors that show less promise. Makafui Azasu, a senior associate at Ghanaian member firm UHY Godwinson CA, believes technology companies could play a significant part in helping to revolutionise the national economy of Ghana, but a lack of basic infrastructure is stunting their development.

“Tech companies are important to the economy of Ghana, but current government policies do not create enough room for their relevance to be seen and they are not fully supported. That is not likely to change in the coming decade, as far as I can see,” he says.

A GROWING INCUBATOR NETWORK

Ghana’s tech sector may be limited, but it is sustainable. Makafui believes that dedicated technology hubs and incubators are supporting technology startups in Ghana, by offering ‘technical support in terms of infrastructure, physical space and also networks with tech hubs outside Ghana to help offer ideas and guidance’.

He is not alone in the belief that technology hubs are driving the digital economy in many parts of Africa. In Nigeria, Lawrence identifies 55 established private technology hubs, and more are planned. In addition, the government has acknowledged the importance of the tech sector to Nigeria’s economy by creating its own network of state-owned startup incubators. Together, these conducive, specialised spaces are nurturing Nigeria’s digital economy.

“These innovation centres continue to provide young startups with high speed internet access and free training,” says Lawrence. “They have made it much easier for self-starters to access best practice, legal and regulatory information, marketing and investment networks. They also provide mentoring opportunities.”

Similarly, Ugandan technology companies are benefiting from a growing network of tech hubs and innovation centres, currently around 20 in number. Like Lawrence, Sameer says they provide a range of benefits, from cost-effective office space and networking opportunities, to access to angel investors, venture capitalists and potential mentors. “These are places where like-minded startups, technologists and investors are able to informally socialise and support each other with ideas, relationships and advice,” he adds.

On the island of Mauritius, Dominique Samouilhan, partner at UHY member firm UHY & Co, says that, while there may be no official tech hubs, technology companies are finding ways of coming together – particularly in information and communications technology (ICT).

Some businesspeople have set up co-working centres to attract young entrepreneurs wanting to incorporate their own startups in the ICT sector.

“These co-working centres stimulate interaction between startups, with the aim of building future relationships and sparking new ideas. Some bigger enterprises have also created angel funds to assist ICT startups financially.”

A GATEWAY TO AFRICA

not stopped the Mauritian government from announcing ambitious plans to support and grow the technology sector. “ICT has become more and more important to the Mauritian economy and it is one of the objectives of the government to make ICT a major pillar of the economy in years to come,” says Dominique.

That support includes a ‘Digital Mauritius 2030’ strategy and a specific focus on digital government and artificial intelligence (AI). Today, the ICT sector contributes around 5.6% of Mauritian GDP. The government wants to increase that contribution to around 10% by 2030, and sustain 50,000 jobs (out of a total population of 1.2 million).

Mauritius has advantages in this regard. Most importantly, it is seen as a safe place for foreign investment, ranking highly on measures of economic competitiveness, good governance and economic freedom. That has had knock-on benefits for the country’s technology sector.

A number of major international players – Accenture, Ceridian, AXA Assistance, Huawei and Orange Business Services, among others – are already using Mauritius as an ICT centre.

“It is anticipated that more international players will choose the country as a platform for their penetration into Africa,” says Dominique.

The presence of international players provides knowledge, infrastructure and potential partnerships, and inspires local entrepreneurs. To some extent, that is happening across Africa. In April Google announced the opening of its first AI centre in Africa, in the Ghanaian capital, Accra. From this base, Google aims to partner with universities and policy-makers and help drive the development of AI across the continent.

CHALLENGES REMAIN

The tech sector clearly has a significant role to play in the economies of many African countries, and that role is certain to grow. But as the sector matures, scaling presents new challenges. In Ghana, Makafui says sector growth is likely to be stunted by inconsistent broadband coverage coupled with an erratic power supply.

Ghana is far from alone. Infrastructure problems limit potential in many African nations. “In Nigeria, too, the cost of doing business is higher because of a lack of basic infrastructure such as power, good roads and dedicated broadband service providers,” says Lawrence.

Sameer identifies an issue with outdated, unsupported technology. Ugandan technology firms are often reliant on equipment that is approaching obsolescence. “With last July’s end of support for Windows Server 2003, for example, organisations that had not migrated away from the platform by the deadline were exposed to security threats and regulatory mandates that were no longer addressed with patches and updates,” he says.

The other threat to sector growth in many countries is a dearth of qualified talent. As Dominique says: “The main issue is probably the mismatch between degree holders and the labour market. There is a real need for software engineers, web developers and so on. The educational training content and patterns must be reassessed.”

In Nigeria, Lawrence says the cost of training and obtaining relevant qualifications can prove a barrier to startups looking to scale. Meanwhile, Sameer sums up the situation in Uganda:

“To say IT talent is in demand would be the understatement of the decade. Even if you land a gem, competing salaries from other companies in desperate need is a constant worry.”

While UHY member firms may not be able to do much about the IT skills gap or erratic broadband, as Dominique explains, they are often asked to do far more for inexperienced tech startups than accounts and tax compliance alone.

“We accompany them along their way towards growth,” he says. “We assist them in raising finance with banks and investors. We use our network to introduce these entrepreneurs to potential venture capitalists, business incubators and investors. Moreover, we help them with the preparation of their business plan and feasibility reports, which then enable them to get facilities with banks.”

These fragile young businesses need all the help they can get. The technology startup sector is increasingly important to the economies of many African nations, buoyed by a growing network of hubs and incubators and record levels of investment. But it will take updated infrastructure, improved technical training and excellent professional services to ensure the sector’s obvious promise is fulfilled.

Notes for Editors

UHY press contact: Dominique Maeremans on +44 20 7767 2621

Email: d.maeremans@uhy.com – www.uhy.com