Mauritius: Financial Centre Ambitions On Track
The shift in economic power from west to east and from north to south is ongoing. The importance that Africa will play in this given its natural endowments and growing domestic consumer markets means that the need for a regional financial and services centre has arisen. Risk Watchdog attended a conference in March, where among others, the Mauritian Minister of Finance (and Vice Prime Minister), Dr Ramakrishna Sithanen, outlined how Mauritius plans to position itself to take up this mantle. I left the conference with the distinct impression that Mauritius’s ambitions are achievable, for the following reasons:
- Geographic position – It is in a time zone that will allow it to interact with all major global financial centres. Furthermore, it is ideally placed in the increasingly important economic arc that links India and China with resource-rich Africa.
- Business Environment – Mauritius is making bold moves to provide a business environment which will attract foreign firms. Examples of the favourable environment which sees the island nation ranked 17th out of 183 countries in the World Bank’s Ease of Doing Business rankings are:
- Double taxation avoidance agreements (DTAA) with 35 countries (two thirds of which are with African and Asian countries)
- Simplified, low-rate tax regime (15% for all forms of tax while capital gains are not levied at all)
- Ex post evaluation of compliance to Mauritian regulations when businesses are being established rather than firms having to await approval prior to setting up
Establishment of a commodities and currency futures exchange offering US$ contracts against the majors (EUR, GBP and JPY) as well as the Mauritian rupee and South African rand. Tradeable commodities will include precious and base metals, agri-commodities, energy, freight and carbon credits.
Reform-Mindedness – Perhaps the biggest takeaway from the conference was the acute awareness shown by the impressive Dr. Sithanen of the work that needs to be done for Mauritius to achieve its goals. In Africa, unfavourable business environments (which are often the result of the inability or unwillingness of governments to make reforms) are frequently the largest impediment to investment and economic progression. Sithanen’s presentation left me with the impression that there is a determination within the administration to continue with reforms to make the country as attractive as possible. This of course assumes (which I do) that the ruling Mauritius Labour Party will win the May elections.