Kenyan Startup, MPost seeks greener pastures with strategic headquarters move

MPost, a renowned Kenyan tech startup celebrated for its innovation in transforming mobile numbers into virtual addresses, has declared a significant operational change. The company is shifting its headquarters from Nairobi to Kigali, the capital of Rwanda, effective November 2023.

This move is part of a broader trend where Kenyan startups are increasingly exploring opportunities beyond their home country, with MPost citing a more favorable business environment in Rwanda.

The strategic decision to relocate, disclosed in a statement reported by TechTrends Media, represents a noteworthy transition for MPost. The move aligns with Rwanda’s reputation for providing a conducive business climate, particularly attractive to tech startups, marking a bold step in MPost’s expansion strategy.

Established in 2016 by Abdulaziz Omar and Twahir Mohamed, MPost has gained recognition for its platform that revolutionises traditional postal systems by converting mobile numbers into official virtual addresses. This innovative approach facilitates real-time notifications for individuals receiving mail through their virtual addresses.

Operating in Kenya, Rwanda, and Burundi, MPost has been a trailblazer in the digital addressing, postal, logistics, and e-commerce sectors. As part of its relocation to Rwanda, MPost will establish its base at Norrsken, a Swedish coworking space and investment fund that set up operations in Rwanda in 2019.

Norrsken recently closed its debut fund, focusing on supporting African growth-stage startups, with a total value of USD 205 million, announced earlier this month in a TechCrunch report. Twahir Mohamed, Founder of MPost, expressed excitement about the move, highlighting its significance as a launchpad for the company’s expansion across Africa.

The decision to move to Rwanda is attributed to the government’s commitment to fostering innovation and creating an enabling environment for tech entrepreneurs. Rwanda, with its growing vibrant tech ecosystem and startup community, emerges as an ideal landscape for MPost’s ambitious expansion plans.

Conversely, concerns have surfaced within Kenya’s tech business landscape due to increased taxes targeting digital economy players. Recent tax hikes, including a doubling of the digital service tax and heightened corporate tax rates, have led to discontent among tech firms in Kenya.

The startup community in Kenya has faced pressure from perceived disincentives, with instances such as payments services startup Pesapal dealing with a substantial tax bill, causing unease in the industry.

Reflecting on the changing tax landscape, industry players like Jumia and Multichoice have voiced concerns over potential double taxation and the impact of new taxes on e-commerce, mobile money transfers, and digital services.

There are also reports, including a Quartz Africa interview, suggesting that Wasoko, a significant player in Africa’s growing B2B e-commerce scene, moved its headquarters from Kenya to Zanzibar due to the perceived unfavorable conditions in Kenya and more supportive fiscal policies in Zanzibar.

However, Wasoko clarified that its headquarters remain in Kenya, and the company has only established an Innovation Hub in Zanzibar. The company asserts that its CEO, Daniel Yu, never made references to escalating taxes in Kenya or the Finance Bill in the original interview, emphasizing misrepresentation in the publication.

The Kenyan government’s expansion of the tax net to include e-book sales, movie streaming, online dating, gaming, and subscription-based media has heightened concerns among tech-based businesses.

While MPost anticipates sustained growth and technological innovation in Rwanda, the apparent trend of a tech exodus from Kenya signals a growing pattern where startups seek more favorable environments amid uncertainties.

This shift prompts essential questions about finding a balance between regulatory demands and fostering a conducive ecosystem for technological innovation in Africa.