Investing in Mauritius with Rogers Capital

Kabir Ruhee, CEO, Rogers Capital

Why do so many companies choose Mauritius as the springboard for their African operations?

The Mauritius International Financial Centre (MIFC) has an established reputation as a safe, trusted, and competitive international financial centre, reaffirming its position as the preferred jurisdiction for FDI flows towards Africa.

Notwithstanding the network of DTA treaties that are currently in place with several African jurisdictions, Mauritius possesses the right attributes to position itself robustly as the preferred investment gateway to and from Africa.

The country offers unparalleled ease of doing business. Ranked in the 13th position in the World Bank’s Doing Business Report for 2020 with a 81.5 score on the “Ease Of Doing Business” (EODB) criterion – where it is ahead of countries like Ireland, or Germany – Mauritius is the first African country from the Sub-Saharan region to achieve this feat. Supplementing the business facilitation advantage, Mauritius has signed 23 Investment Promotion and Protection Agreements (IPPAs) and 22 Double Tax Avoidance Agreements (DTAAs) with various African countries, making it a natural gateway to the continent. Moreover, the presence of major international and local banks in Mauritius with branches in various African nations, together with international accounting, financial and legal institutions complete the picture. Finally, the country invariably primes the Ibrahim Index of African Governance, a testimony of the reliability of our institutional framework.  

The MIFC is consistently improving upon its legal and regulatory frameworks for exchange of information and transparency in line with international norms and standards. As a member of regional economic blocs such as the Southern African Development Community and Common Market for Eastern and Southern Africa, and a member of the African Union, Mauritius plays an active role in fostering diplomatic and economic cooperation between African countries. Mauritius has the fastest growing wealth market in Africa and ranks amongst the leading African countries in terms of talent attraction and infrastructure. In a nutshell, despite the relative smallness of our country and economy, we remain quite influential in the region based on our track record and ambition.

What role do you see for Mauritius in supporting the development of financial services and economic progress across the African continent more broadly?

An investor or businessman aiming at making investments into or trading with African countries will actively look for a holding location from where to develop his activities. The MIFC would satisfy most if not all of the criteria that this businessman or investor would be looking for. First and foremost a stable economic and political environment, then the absence of exchange controls, the proximity of Mauritius to Africa both in terms of distance and time zones, the accessibility to and from Mauritius, financial institutions in the country which know and are prepared to do business with African countries, the familiar and tested business laws and a flexible and enjoyable work and live environment, to name but a few. Mauritius could easily become the headquarters from which operations in Africa are managed.

Mauritius has also had Financial Services as one of its economic pillars since 1992. Skilled professionals from the sector have been in demand across the world but particularly in advanced financial centres like Luxemburg, London or Singapore. This exchange of knowledge and skills could happen with African countries in a more consistent manner, all the more so given that certain African countries are also looking at developing their own financial centres.

How has the EU’s decision to place the country on its backlist impacted the financial services sector in Mauritius?

Mauritius was added to the EU list of high-risk third countries, due to its inclusion on the Financial Action Task Force’s (FATF) list of ‘Jurisdictions under Increased Monitoring’.  The Global Business sector had started feeling the effect of FAFT/EU listing following the announcement made in May 2020. We have officially been on the list as from 1 October 2020 and while we may not be in a position to quantify this impact in terms of loss of revenue to the industry, we have definitely noticed that some quality business is not flowing towards our jurisdiction whilst a few existing businesses are feeling uneasy with the current situation.

However, immediately after the inclusion of Mauritius in the FATF grey-list and thereafter in the EU’s list, the Government has redoubled its efforts in the AML/CFT area. At the outset, despite being given time till September 2022 by the FATF, it preponed the timetable for meeting the five pending FATF recommendations, a testimony of the seriousness with which the matter is being dealt with. Moreover, Mauritius proactively proposed the setting up of a technical platform between the Directorate-General for Financial Stability, Financial Services and Capital Markets Union (DG FISMA) of the European Commission and the Mauritian counterpart to provide regular updates on the progress made by the country.

The first meeting of the technical committee was held in July 2020 and it was brought to the attention of the Mauritian Authorities that the European Commission will base itself on the assessment which will be conducted by the FATF and that once Mauritius is removed from the FATF list, the European Commission will take around 6 weeks to remove the jurisdiction from the blacklist. In July 2020, the AML and CFT (Miscellaneous Provisions) Act 2020 was adopted by the National Assembly of Mauritius to strengthen the legal framework for AML/CFT enforcement, amendments were brought to the Financial Intelligence and Anti-Money Laundering Act 2002 to fine-tune the supervisory legal framework, and the Prevention of Corruption Act 2002 was also bolstered to provide a stronger deterrent to corruption offences.

During the subsequent virtual face-to-face meeting and plenary meeting in September 2020 and October 2020 respectively, the FATF commended the tremendous progress made by Mauritius in implementing the Action Plan, despite the COVID-19 pandemic. Following that, Mauritius submitted its Second Progress Report to the FATF on 27 November 2020 which described all the updated actions taken to implement the Action Plan and underlined the significant overall progress undertaken by Mauritius.

While the FATF and EU listing have been setbacks, the silver lining is that it has accelerated changes in the IFC to further bolster the standing of the Mauritius centre. When we come out of the list, which we believe will be sooner rather than later, we will certainly be in a much stronger position to attract  even more quality business.

What is the importance of the Mauritius-China Free Trade Agreement which came into place earlier this year?

The Mauritius-China Free Trade Agreement (FTA), which came into force as from the 1st of January 2021, is the first ever free trade pact that China has ratified with an African country. Given that Mauritius has been trying for several years to position itself as a base for Chinese investments flowing into Africa, the Mauritius-China Free Trade Agreement (FTA) comes as a most welcome development indeed, opening up an array of opportunities for the island economy to position itself as the preferred investment gateway between China and Africa.

With the FTA in place, almost all goods exported between the two countries will be exempt from custom duties; 96.3% of product categories made in Mauritius will enter China duty-free while 94.2% of product categories made in China will enter Mauritius duty-free. As for the small size of the domestic market, the world is now its oyster with the FTA positioning Mauritius as a base for Chinese exports to Africa, coming as it does at a most opportune time when the African Continental Free Trade Agreement (AfCFTA) has also entered into force.

In terms of the composition of exports from Mauritius to China, the FTA opens up exciting avenues for niche local products such as special sugars, rum, fish and jewellery. Most significantly for the island economy which possesses one of the largest Exclusive Economic Zones in the world at over 2 Mn km2, the FTA with China also represents an enormous opportunity for the Ocean Economy in Mauritius whose marine resources have remained largely under-exploited so far.

On the services side, both countries have opened up more than 100 sectors – including tourism, law, financial services, telecommunications, ICT, professional services, construction and health – to economic operators from the other country. Moreover, the FTA agrees to promote the development of a Renminbi clearing and settlement facility on the territory of Mauritius. This allows the island economy to develop itself as the African jurisdiction for clearing Renminbi, thus providing an unparalleled opportunity for African firms to deal directly with Chinese corporations without risking FX exposure.

Momentously, the FTA also signals a move for both countries to share expertise in FinTech with the wider aim of promoting innovation in financial services. With China proceeding at pace with the digital yuan, the onus may just fall on Mauritius to pioneer the Central Bank Digital Currency revolution for all of Africa. Finally, the FTA positions Mauritius to welcome Chinese professionals across the entire spectrum of services required for sustainable investments into Africa, besides reinforcing the substance measures and Core Income Generating Activities introduced by the Mauritius International Financial Centre (MIFC) as part of its revamped global business model.

How does Rogers Capital support companies in Mauritius? Which sectors are you focused on?

The Company has defined three strategic poles for its activities: Corporate Services, Technology Services et Financial Services. We believe we have a unique value proposition for our clients, as regards the complementarity of the various components that constitute Rogers Capital today. The extensiveness of our offerings combined with depth of capabilities is a key differentiator especially when it comes to substance. Notwithstanding our traditional fiduciary offerings, we are one of the leading systems integration providers in Mauritius and in the Indian Ocean region with proven expertise and credentials into the fields of software engineering, cloud services, digital transformation, infrastructure management, connectivity and disaster recovery management. We also provide high value services in the areas of corporate finance and advisory.  The hosting of such capabilities under one roof maps very well with the requirements of an international customer base that is demanding on quality, breadth and depth. Besides, the three other served markets of the wider Rogers Group - Hospitality, Logistics and Property bode also well for the provision of comprehensive and quality services to such a clientele.

We have substantially beefed up our capabilities by investing heavily into the development of our human capital and we have also recruited some high caliber professionals with significant international exposure who are the best in their fields. We have also made the conscious and informed bet that information technology will drive tomorrow’s business models. To date, 45% of our workforce comes from our technology business. Those are software engineers, infrastructure architects, telecommunications specialists, information security consultants or functional subject matter experts whose focus is predominantly to innovate and drive agility. 

How is Rogers Capital adapting to changes in the financial services industry, for example the increased uptake in fintech and regtech products?

On the Fintech front, our Consumer Finance arm has made significant progress to adapt to changes brought about by the pandemic. Our online payment platform was deployed within a matter of days to adapt to the lockdown that was imposed on the island. Furthermore, our apps targeted to our merchants as well as our clients allow for seamless onboarding and service in the credit and leasing sectors.

RegTech, though relatively new, is maturing rapidly. Compliance is growing increasingly complex. Financial firms are dealing with more changes and more complexity than ever before. In the face of the looming regulatory burden, regtech has emerged to help businesses streamline nearly every part of the compliance process. At Rogers Capital, we have developed solutions for our management company which could be easily deployed to other corporations across Africa. Our Cybersecurity advisory team has deployed their cyber resilience roadmap, in an effort to accompany management companies in their quest for effective cybersecurity, as recommended by the authorities to comply to guidelines.

Our Digital Transformation team has on the other hand developed the Sanction List Monitoring Platform to make compliance less cumbersome. The platform automates and simplifies the screening of our customers against the sanctions lists. It aids the compliance department detect risk threats and comply with AML/KYC regulations.           

Contact Rogers Capital:

Kevin Besoondyal
Head of Business Development
Kevin.Bessoondyal@rogerscapital.mu