African tech firms pick UK for licences, US for funding, study shows

African tech companies are increasingly using the UK as a base for licensed operations and customers, while turning to the US mainly to raise funding, a new study shows.

The report by TLP Advisory, a cross-border venture law firm with roots in Nigeria, examined 100 tech companies from Kenya, Nigeria, South Africa, Egypt, Ghana and Morocco that have a presence outside their home markets.

It found that the US is largely used for financing-linked incorporation, while the United Arab Emirates serves as a base for day-to-day operations and access to the Middle East.

The UK stands out for combining both, with firms also holding regulatory licences and running commercial operations there.

Among companies with UK links, 84 percent were incorporated there, 47 percent had operations and 19 percent held regulatory licences.

Only three percent of US-linked firms and four percent of UAE-linked firms held licences in those markets.

“What’s striking about the UK is how often it comes with more than only incorporation. It comes with licences, teams on the ground and customers,” said Odunoluwa Longe, co-founder and partner at TLP Advisory.

“A round closed in Delaware and a licence in London are both important but they play very distinct roles.”

Ms Longe urged founders to be deliberate about what they want to achieve in each market.

The UAE is the most operations-focused of the three, with 87 percent of UAE-linked companies running operations there.

Egyptian firms are the most drawn to the Gulf state, with 70 percent having a UAE affiliation compared with 50 percent with links to the US.

Diaspora pull

For fintechs, the UK offers a mature market and a large African diaspora with strong cross-border financial ties.

The report cites research showing that 40 percent of UK residents born in sub-Saharan Africa send money abroad, compared with 27 percent of all UK residents born overseas.

“Africa was always going to be home,” said Olugbenga Agboola, founder and chief executive of payments firm Flutterwave.

“But we also understood quite early that building a business of this scale would require access to capital, talent, and opportunities beyond Africa.”

The study also points to UK tax incentives for early-stage investors, a visa route for foreign founders, the familiarity of English common law and access to the London Stock Exchange.

“London sits between developed and emerging market investors, and that’s its competitive advantage,” said Abi Ajayi, head of Middle East and Africa primary markets at the London Stock Exchange.

The findings cover firms selected for their documented international links and are not representative of the wider African tech sector.

The research was funded through the UK-Nigeria Tech Hub, an initiative of the UK Foreign, Commonwealth and Development Office.

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