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Introducing Itana - Africa's first Digital Free Zone

September 6, 2023

What is Itana?

Is it a new physical city in Africa or is it a digital govtech startup?

Our story unites the power of both to unlock the tech talent of Africa to fuel the digital economy on the continent. To do so, we start digital, addressing the challenges with policy and ease of doing business; then we develop to include a physical component, building necessary infrastructure for the future of live and work.

Itana is building the first digital free zone in Africa. We aim to be the go-to online jurisdiction for global technology companies scaling across Africa, built upon three key pillars: Governance, Infrastructure, and Community.

What does this look like?


Itana
will provide an ideal business environment for the digital economy, pioneering the concept of digital free zones in Nigeria. In this online jurisdiction, global technology and service-oriented businesses, and startups, have the ability to incorporate and operate fully online as a free zone enterprise, taking advantage of an array of business services and incentives encompassing taxation, immigration, banking, investment, and protection.

Itana enables companies to access the African market, in turn attracting foreign investment that will help fuel the growth of the continent’s technology and digital services economy, while unlocking the massive potential of the talent force and improving Nigeria's ease of doing business index

Itana will also develop a 72,000 sqm live-work-build district in Lagos, Nigeria (Alaro City Free Zone) that will serve as a physical hub for community-building and provide the physical infrastructure needed to support digital talent that will include reliable wifi and power, coworking spaces, and residential facilities.

The Story of Special Economic Zones and Free Zones


To fully explain Itana’s story, it is helpful to refer to established examples such as Shenzhen and Dubai. Most of us know of Shenzhen as China’s tech capital and Dubai as the glamorous capital in the Middle East. What many may not realize is that these capitals are shaped heavily by policy. Specifically, these regions are known as special economic zones (SEZ) or free zones (FZ): 

“an area in which the business and trade laws are different from the rest of the country, intended to function as zones of rapid economic growth by using tax and business incentives to attract foreign investment and technology.”

They facilitate global trade alongside local economic development by enabling international companies to come build, invest, and employ people in the host country.

For example, the free zones in Dubai operate under the British Common Law for civil and commercial disputes to give foreigners a legal peace of mind. In Shenzhen’s case, China’s Prime Minister Deng Xiaoping took inspiration from Ireland’s Shannon Free Zone and created special manufacturing and tax incentive zones that opened China for the first time to the world in recent history.

Towards a Digital Economy


The world is undergoing a massive digital transformation: more and more of business, commerce and life take place online. Remote work dominates. More often than ever before, companies can virtually set up in a geography that they do not physically exist in. A few notable jurisdictions that focus on optimal business laws and ease of incorporation, with less emphasis on the physical presence, include Delaware, Mauritius, and Canary Islands.

In the case of Delaware, almost all technology startups are registered as Delaware C Corporation whether they operate out of San Francisco, New York, London, or Lagos. The State of Delaware in principle is analogous to that of Free Zones. Corporations registered in Delaware that do not do business in the state do not pay corporate income tax, shareholders who don't reside in Delaware need not pay tax on shares in the state, and the business law of Delaware optimizes for operational efficiency. For example, Delaware allows one person to hold numerous positions in the company (officer, director, and shareholder), whereas in other states this only applies to sole proprietorships or LLCs as opposed to corporations. Additionally, Delaware has well-developed and predictable legal precedents that may benefit corporations as dictated by the Court of Chancery as opposed to a traditional trial system – using judges rather than juries (source).

In 2014, the government of Estonia released the novel concept of “e-Residency”. Through obtaining e-Residency, one is able to establish an Estonian entity and have access to doing business in the EU. As a result, companies from many European countries end up incorporating in Estonia as opposed to their own respective countries simply because of the greater ease of doing business: it is possible to launch a business from one’s home (outside of the country) in just 20 minutes and operate it remotely, saving on time and administrative costs, and access funding and trade opportunities within the EU. The program launched in 2014 and, as of June 2023, there are 103,000+ e-residents from over 170 countries and 26,000+ Estonian companies established by e-⁠residents (source).

A million reasons to believe in Africa


Africa is the fastest growing continent with respect to population. By the end of this century, Africa will be the only continent experiencing population growth.

Today, most of the world's biggest cities are in Asia: Shanghai, Dhaka, Delhi, and Tokyo. By 2100, these names will be replaced by Lagos, Khartoum, Kinshasa, and Abidjan. At that time, Nigeria is also projected to overtake China in population. (This post, along with its interactive graphics, is worth taking a look at.)

With population, there is economic growth. This means increasing purchasing power and education. The opportunity is unmeasurable.

The steady population growth is coupled with unrivaled growth in the tech industry. It’s not news that Nigeria is increasingly becoming the new tech epicenter, witnessing the fastest growth for software developers. We see unicorns like Andela whose sole business model is to bridge African talent to the other parts of the world. There is an overwhelming need globally to hire better tech talent: by 2030, it is estimated that the U.S. will lose $162 billion worth of revenue annually unless it finds more tech talent (source).

Challenges of doing business


Africa’s digital economy has fundamental deep rooted challenges. According to USAID, for example: 

“Nigeria’s economic potential is constrained by many structural issues, including inadequate infrastructure, tariff and non-tariff barriers to trade, obstacles to investment, lack of confidence in currency valuation, and limited foreign exchange capacity.”

Nigeria’s growing tech workforce holds enormous potential to transform the nation’s economy, yet is currently handicapped by insufficient investments in infrastructure (both physical and social). The limited infrastructure results in sub par office spaces, 5 hour daily work commute, and loss of productivity from power and internet outages, diminishing the potential of the technology workforce and hampering their ability to scale. For example, Andela’s office moved multiple times a year as the company rapidly scaled its operations. 

There is huge synergistic potential in investing in reliable infrastructure, and not doing so negatively affects the potential of the country’s tech workforce, and as a result, its economic development trajectory. However, in order to attract this investment – especially from foreign sources of capital – required to unlock the potential of Nigeria’s digital economy, stronger governance structures and incentives are needed to build investor confidence. Today, for example, persistent currency fluctuation continues to discourage foreign direct investment. Furthermore, with the normalization of work on the internet and employment of workers in Lagos by international organizations, there are additional hurdles surrounding their ability  to receive dollar payments  legally.

For businesses, difficulty in capital repatriation heavily affects business operations and discourages investment. In the aviation industry, for example, $450 million in revenue was held by the country earlier this year, forcing many airlines to suspend and reduce flights to Nigeria (hence the expensive flights in and out of Nigeria). And these are problems not only faced in Nigeria but the rest of the continent.

Furthermore, at the moment the only way to obtain a Free Zone Enterprise license is by manually filling a physical application that is couriered to the government agency in Abuja (Nigeria’s capital) that then takes weeks to process, going from department to department.

Itana's Vision


I spoke to a startup founder about what is top of mind for them when moving to a new country. His immediate response: rule of law along with business rights and trust in law enforcement. Tax incentives are always a plus, too.

While walkable cities, beautiful architecture, and ample amenities are great, building from scratch allows us to address the fundamentals: policy, infrastructure, and community.

What we are building with Itana is a Digital Free Zone for the digital economy that provides an ideal business environment for global startups, technology and services companies to operate from Nigeria and scale across Africa, enabling firms to set up and operate fully online. Our one-stop-shop provides access to business services and business incentives with respect to tax, immigration, banking and capital repatriation.

At Itana, we often think about how we can build trust, operate in a transparent manner and to give our customers and business owners comfort and peace of mind.

We are building a platform that mitigates the growing pains of Africa’s tech industry: a model system of digital, physical, and social infrastructure that enables the most ambitious talent on the continent to build. 

We envision a better do-business environment through improved governance, infrastructure, and community for global credibility and acceptability, increased foreign direct investment, and more jobs for the country and the continent. 

We are not just building an app or infrastructure; we are in the business of building a free zone, the gateway to building a global business in Nigeria.

We’ve recently announced a $2m pre-seed funding round to build Africa’s first digital free zone led by LocalGlobe, Amplo, Pronomos, and Future Africa. More about us on Wired, Financial Times, and BBC.

Sign up on www.itana.africa to be the first companies to obtain an Itana Free Zone business license.

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