Mauritius and the Impact of COVID-19 with Rogers Capital
In conversation with
Roshan Nathoo
Managing Director
Rogers Capital Corporate Services
Rogers Capital works across a wide range of corporate and financial services. Could you briefly outline the key lines of business for the company?
Our flagship, the Rogers Group, was one of the first conglomerates to start a management company in the early 1990s to serve foreign investors wanting to use Mauritius as an investment platform. Since its inception, Rogers Capital has adopted an avant-garde approach to combine world-class financial expertise with cutting edge technology to provide its clients with sophisticated solutions for their businesses. Rogers Capital has a robust proven track record that spans over two decades. Our most recent expansion is in Côte D’Ivoire where we have opened a rep office.
The Rogers Capital services portfolio is geared to accompany clients throughout the entire lifecycle of their project, from inception to successful completion in Corporate & Trust Services, Outsourcing Services and Private Client Services. We provide a complete suite of professional services, including Corporate Administration, Trust Management, Tax Advisory, Fund Administration & NAV, Accounting & Payroll Outsourcing, that are tailored to our clients’ needs.
This is a very difficult time for many businesses, including those across the African continent. What is your advice to businesses in Africa to best prepare economic impact of coronavirus?
The COVID-19 pandemic has to be the biggest global event in our lifetime. Along with the serious implications for people’s health and the healthcare services, coronavirus is also having significant impact on businesses and the economy in general. It is already being predicted that Africa will see an economic contraction between -2.1% to as low as -5.1% this year. According to the World’s Bank bi-yearly economic update, the continent will face its first recession in 25 years compared to last year’s 2.4% growth. The African Union is also predicting a massive 20 million job losses due to the health crisis. My message to companies in Africa also is very much aligned to the strategy that we have adopted at Rogers Capital:
Stimulus Incentives: Governments, the private sector and development institutions alike need to expand existing efforts to safeguard economies and livelihoods across Africa. Each government is already coming up with a series of stimulus incentives for corporates specifically targeted to SMEs and micro businesses. Enforcing such measures will mitigate the subsequent impact on business.
Strategise: Now is the time to peer through the fog of uncertainty to anticipate innovative business decisions. Companies should make use of the downtime brought about by the confinement to engineer new ways of doing business and improve on frameworks already in place. Being agile and proactive is an absolute must in these unprecedented times.
Cost Optimisation: In the wake of the coronavirus, most enterprises worldwide are reviewing their immediate business priorities to ensure sound cash flows, reduce costs and maintain continuity. The situation is no different in Africa – it is time to cut all discretionary expenses. However, businesses do have the moral duty to save as many jobs as possible during this time; cost optimisation should therefore not relate to staff costs. Negotiating with banks and suppliers for payment holidays, rebates, moratoriums, interest cuts and any help they can give should be top priority. This economic shutdown is not regional, it is global. Now is the time to negotiate.
Work from home: The concept of remote work or work from home has been practiced for a few years now, thanks to the major advancements made in technology. Now, amid the pandemic, almost all companies have shifted to a remote work model to keep operations running. Staff should be geared and empowered to maintain operations remotely, under any circumstance.
Communication: As with all crises, increased communication reduces anxiety. Increasing communication with staff, suppliers and clients is paramount. Remind and reassure clients that you are still operational and have their best interests at heart. Additionally, make your staff as comfortable as possible by being honest and open with them.
The African Continental Free Trade agreement has promised to boost trade and investment across the continent. Where does this process stand in light of the current crisis? What are the next steps to ensure that the regulatory frameworks are in place and what role does Mauritius see itself playing in this process?
The AfCFTA’s core objective is the free movement of people, goods and services within the continent. In response to the COVID-19 outbreak, most African states have had to enforce lockdown measures on travel and confinement of citizens. Understandably, only the transportation of essential supplies and services has been allowed. In such a context, the flow of goods, services and capital within African countries is being severely impacted. Nonetheless, the pandemic is the time for African Union member states to prioritise the manufacture of pharmaceutical products, medical supplies, food items and other essential goods. This could be the time for African governments to focus on setting the most appropriate landscape for industrialisation in Africa. The continent has no time to lose.
From a regulatory perspective, as is normally the case in different types of multilateral trade and investment agreements, some countries are better positioned to make the most of its benefits. Research from Baker McKenzie and Oxford Economics supports this presumption and suggests that some countries are better placed than others to reap the rewards of intra-regional trade. A large player like South Africa is very likely to experience the maximum benefit due to its existing strong connections with countries across the continent – being one of the largest investors on the continent. Countries with open economies and good infrastructure, such as the West African states of Ghana and Côte d’Ivoire are also well positioned to benefit from the agreement.
On the other hand, countries with higher security and political risks may find it more difficult to integrate into regional value chains. The AfCFTA’ s success will also be largely dependent on the continent’s ability to overcome limitations in infrastructure and improve the currently limited air, sea and train connectivity across the continent. Which therefore indicates that the most conducive regulatory requirements are mandatory to address the issues specified above.
Coming to Mauritius, the country has signed and ratified the AfCFTA in September 2019, thus becoming a full member of the new area. Mauritius has been positioning itself as the financial centre for Africa. Culminating at the 13th place worldwide and the 1st place in Africa in the World Bank’s Ease of Doing Business Report 2020, Mauritius enhances its attractiveness as being the ideal hub for business into Africa. The island is a tried and tested jurisdiction in terms of facilitating investments towards the continent and with the unfolding of the AfCFTA, it is anticipated that there will be more foreign investments in Africa – specifically to address the continent’s infrastructural needs in terms of connectivity and energy – and many of these will be channelled through Mauritius. With its acute focus on investor protection, Mauritius remains a safe destination for promoters to structure their investments and to raise financing.
What measures has the government of Mauritius put in place to support companies on the island through the coronavirus crisis?
Following the outbreak of COVID-19 in Mauritius, the government came up with a series of measures to support sectors of the economy:
Drop of Key Repo Rate from 3.35% to 2.85% implying a reduction in lending rate on bank loans.
The introduction of a Special Relief Programme of MUR 5 billion through commercial bank loans from 16th March to end July 2020 so that businesses can meet their cash flow and working capital requirements. The loans will be with a maturity of 2 years at an interest rate of 2.5% p.a. inclusive of a 6 months moratorium on capital and interest payments.
Banks are providing a moratorium of 6 months on capital repayment for existing loans for those enterprises that are being affected by COVID-19.
The launching of the State Investment Corporation (SIC) Equity Participation Scheme to overcome the financial difficulties of enterprises through the issue of redeemable preference shares up to an amount of MUR 2.7 billion.
Support schemes by Investment Support Programme Ltd (ISP Ltd) and SME Equity Fund Ltd through lower interest rates, factoring schemes and corporate guarantee amongst others.
The Development Bank of Mauritius assistance to ease cash flow difficulties of companies with turnover of up to MUR10 million through DBM Revolving Credit Fund up to 31st December 2020. Under this scheme, the credit to companies will be free of interest, provided that it is repaid within 9 months. Otherwise, DBM Ltd will charge interest at commercial rate.
Double Tax Deduction for enterprises affected by COVID-19 on their investment in Plant and Machinery for the period 1st March 2020 to 30th June 2020.
To minimise physical contact, Government will give full support to promote the Work at Home Scheme as announced in the 2018-2019 Budget Speech.
The introduction of Wage Assistance Scheme for employers where employers affected by COVID-19 may after payment of the salary, apply to Mauritius Revenue Authority (MRA) for financial support under the scheme.
The introduction of Self-Employed Assistance Scheme (SEAS) through the MRA to assist self-employed persons who have suffered a loss of revenue as a consequence of the lockdown in the fight against Covid-19.
Many African tech start-ups have been looking to Mauritius to manage Intellectual Property claims. What are the key areas where the jurisdiction of Mauritius can foster entrepreneurialism and business growth across Africa?
Mauritius offers unparalleled ease of doing business. Ranked at the 13th position in the last World Bank’s Doing Business Report, Mauritius is continuously improving its business environment. Supplemented with the business facilitation advantage, Mauritius also has a number of Bilateral Investment Treaties (DTAAs and IPPAs) across Africa, a transparent and modern financial ecosystem, a robust legal framework and social, political and economic stability, making it a natural gateway to the continent.
IP legislation in Mauritius is up to international norms and the country is a member of the World Intellectual Property Organisation (WIPO), and signatory to the Paris Convention for the Protection of Industrial Property, the Universal Copyright Convention, and the Berne Convention.
To reinforce and expand IP protection in Mauritius, the Government developed a new Industrial Property Bill (currently awaiting ratification), covering all aspects of IP. In addition to patents, trademarks, and industrial designs, the Bill protects plant breeders’ rights, geographical indications, and layout designs of integrated circuits and utility models. Under this Bill, legislation on industrial property in Mauritius has recently undergone a thorough review to promote innovation and enhance a legal environment that keeps abreast with international trends, reinforcing its position as a platform with a sound legal framework to protect IP rights.
With a vibrant global business sector that offers options to structure active investments into the continent with the use of holding companies that ensure your rights are protected, Mauritius is indeed the preferred choice for African tech start-ups looking for an IP outsourcing destination.
Looking to the future, which sectors and countries do you see as the most promising investment opportunities in Africa in the coming decade?
Whilst some of the major economies such as Rwanda, Côte d’Ivoire, Ethiopia, Senegal, Benin and Uganda along with Kenya, Mozambique, Niger and Burkina Faso, are all expecting to grow faster than the remaining African countries, I believe that the main growing sectors would be aligned throughout the continent, rather than country specific. Africa’s progress is very much dependent on some key trends, namely the growing consumer market – the population is projected to reach 1.7 billion by 2030. Fast urbanisation, rising income and purchasing power of the population are already spurring growing markets in a range of sectors where Africans have unmet needs, including food, beverages, pharmaceuticals, financial services, healthcare, and education. Industrialisation in Africa, specifically in this moment of crisis, is now more important than ever. African industries have the opportunity to at least double their production within a decade. The Africa Continental Free Trade Agreement, if implemented appropriately, would prove to be a nucleus to boost production in Africa.
African countries are already engaged in closing the infrastructure gap. Although infrastructure still lags behind that of other developing regions, significant progress has been made through investment in the road networks, rail networks, schools, hospitals, water and energy etc. We have seen clear efforts being undertaken by several governments on infrastructure projects as well as improving their respective business environments.
Digitalisation and mobile financing solutions – the number of broadband connections and mobile traffic data across Africa is continuously on an upward trend. Mobile banking accounts have now crossed the 200 million mark and still growing. This trend will allow companies to improve productivity, speed up transactions and access wider markets. Finally, agriculture remains one of the most important sectors of the African economy and is already adapting to changing market conditions, continuously improving efficiency and striving to meet consumer requirements in a competitive global trade system.
