Mauritius remains the preferred jurisdiction for doing business in Africa, says Alan Rungassamy, Executive Director at Sunibel Corporate Services. He highlights that the economic and political stability, as well as the conducive business ecosystem, on the island attract investors within the region to come and invest, and that FinTech and the ‘green’ economy are two sectors which are expected to grow exponentially during the next few years.
We are slowly moving away from a post-COVID era and Mauritius is on its way to recover and even prosper. After more than one year, the Financial Action Task Force (FATF) has removed Mauritius from its list of countries having deficiencies in tackling AML/CFT issues (“grey list”). This news is auspicious for the Mauritius International Financial Centre.
Mauritius on par with the requirements of the FATF
The introduction of robust policies and measures implemented by the Mauritian Government empowered the Mauritian jurisdiction to conform with premier international standards relating to AML/CFT. After a plenary session held in October 2021, the FATF, the intergovernmental policy organisation that sets the global benchmark for Anti-Money Laundering and Combatting the Financing of Terrorism (AML/CFT), announced that Mauritius was taken off its ‘grey list’. Mauritius is now compliant with 39 out of the 40 recommendations imposed by the FATF. On the other end of the spectrum, Mauritius remains Partially Compliant on Recommendation 15 (New Technologies). Mauritius could be the first jurisdiction globally to complete full compliance with all of the FATF recommendations along with its suggested Virtual Assets Business Bill and its Digital Assets Custodial Services Licence.
The removal of Mauritius from the grey list is remarkable news for international investors and businesspersons. The Mauritian jurisdiction reinstates its position among the leading countries to do business in Africa and cements its place as a transparent jurisdiction of substance and repute.
The removal of Mauritius from the FATF grey list bears testimony to the host of bold policies and measures undertaken by Mauritius in honouring and adhering to the highest international standards in combatting money laundering and the financing of terrorism. This removal materialised because of Mauritius enhancing the capacities of investigative authorities to detect risk in medium and high-risk sectors, a significant increase in domestic and international cooperation and appropriate efforts to investigate and prosecute money laundering. There has also been an improvement in the capacity of the AML supervision of the global business sector and an adequate support of the supervision of the non-financial sector.
Mauritius no longer on the UK’s list of high-risk third countries
Following the news of Mauritius being taken off the grey list of the FATF, the United Kingdom has reviewed its Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 and consequently took Mauritius off the list as a high-risk country in regard to the improved customer due diligence necessities.
This shows that the British authorities are satisfied with the consistent efforts of Mauritius in combatting money laundering, terrorist financing and proliferation financing. It further reinstates Mauritius as a jurisdiction of trust, repute and substance.
Mauritius off the blacklist of the European Union
Following the positive outcome of Mauritius exiting the grey list of the FATF, the country has been also removed from the blacklist of the European Union (EU). When the FATF announced that Mauritius was on its grey list, the direct repercussion of that statement led to the country being blacklisted by the EU shortly after.
The EU considered the progress of Mauritius in combatting AML/CFT concerns and evaluate the country based on available data from the FATF and after assessment of major reforms undertaken by the country to get off the grey list. Getting off the blacklist will attract further investors and businesspersons from Europe, increase Foreign Direct Investments (FDI) in the country, and reinforce the position of Mauritius as a key business platform for European and international investors.
Putting the economic engine back into full power
The COVID pandemic and the subsequent lockdowns, coupled with the closure of our borders, was hard for private companies as well as governmental institutions nationally. Some businesses continued to work normally through technology. IT tools and platforms enabled service sector businesses to continue serving clients in Mauritius and abroad. Similarly, regulatory organisations strengthened their operations to guarantee the implementation of good governance practices and ongoing compliance through digital means.
The COVID period took its toll on the economy of Mauritius. To turn the situation around and kick-start this post-COVID era, the government announced and introduced new regulatory measures. These included amendments and incentives - intended for SMEs, educational institutions, international investors, High-Net-Worth Individuals and corporates/multinationals in a variety of sectors - that aim to boost investments, restore confidence and create a new economic architecture.
One of the most notable measures was bringing the Key Repo Rate at a record low of 1.85% in March 2020, when COVID landed in Mauritius. With the recent opening of borders to international travellers on the 1st October 2021 and the competitive interest rates offered by commercial banks, the economy of Mauritius will flourish and it will have a positive influence to the balance of payments of the country.
Another measure to attract foreign investments was the depreciation of the Mauritian Rupee. It has encouraged investments in real estate (the threshold of USD 375,000 for obtaining a Residence Permit), and, along with the easing of the requirements for obtaining a Residence Permit or Occupation Permit, is a motivating factor for foreigners looking to relocate to, live and work in Mauritius.
The multiplier effects of these measures provide hope and momentum for a long-term economic recovery.
Mauritius: The leading platform for doing business in Africa and Asia
Mauritius was and is still the preferred business hub for many African and Asian countries. Mauritius ranks first in Africa on various international indices such as for ease of doing business (13th globally) and for governance (Ibrahim Index of African Governance). Statistics from the Financial Services Commission are proof: 1,652 companies (Global Business Companies and Authorised Companies) were incorporated in 2020, compared to 5,238 between January and September 2021.
The recently signed Comprehensive Economic Cooperation and Partnership Agreement (CECPA) with India will enable Mauritian exporters to take advantage of preferential access to a market of over 1.3 billion people. The agreement will also benefit Indian investors willing to trade from Mauritius. In addition, through the Mauritius-China Free Trade Agreement and the African Continental Free Trade Area, entrepreneurs and companies gain favoured access to respective markets. Those Free Trade Agreements will help attract foreign investments from India, Africa and China and position Mauritius as a preferred leading trading hub for the African continent and Asian countries.
With the digitisation of assets and transactions as well as the democratisation of finance in Africa, we have seen a boom in technology-focused companies. FinTech represents significant opportunities, such as investment in cryptocurrency as a digital asset, Custodian Services for Digital Assets, Securities Token Offerings, and Peer-to-Peer lending platforms. FinTech provides the opportunity to provide high value-added and innovative services. In addition, the proposed Virtual Assets Business Bill will further reinforce the attractiveness and competitiveness of the Mauritius International Financial Centre for FinTech activities for the region.
Further proof of the strength and reliability of Mauritius as an attractive listing, trading and capital-raising platform for both local and global issuers is the amount of capital raised by corporates. Despite the impact of the COVID-19 pandemic, the Mauritian Debt Capital Markets were very active in 2020 and 2021. We also witnessed interest of improving local crowdfunding platforms which may represent openings to SMEs (capital raising) and individual investors (revenue stream diversification).
The Green economy initiative is gaining more popularity around the world and a growing number of start-ups in Africa are implementing the green economy concept. As per the Green Economy Assessment Mauritius, a green economy shift in Mauritius might promote opportunities for sustained economic growth, energy and water savings, more agricultural productivity and green jobs. With consumer awareness of environmental complexities, more and more firms globally are feeling the urge to meet these growing demands. If Mauritius meets the demands of the green economy, this will attract even more foreign investments in the country especially since FinTech and the green economy are likely to grow tremendously over the next few years.
Despite the current circumstances, Mauritius remains the preferred jurisdiction for doing business in Africa. The economic and political stability, as well as the conducive business ecosystem, on the island attract investors within the region to come and invest, and even settle in Mauritius. In the current economic and social context, these two sectors (FinTech and ‘green’ economy) are expected to grow exponentially during the next few years.
Attracting local and foreign expertise to strengthen the economy
The recent amendments to the requirements and eligibility for obtaining the Occupation and Residence Permits in Mauritius is intended to encourage investors to come to live and work on the island, where the aim is to further develop our economy by attracting investors and talent.
Mauritius has the objective to become an education hub for the region. Prompting international universities to establish in Mauritius will benefit both local and regional students. The advent of the international universities in the country would turn Mauritius into a knowledge based high-income country. The Young Professional Occupation Permit (YPOP) is also a plus.
Mauritius also has reputed local and international service providers including Investment Managers, insurers, rating agencies, hedge funds and more, thus bringing in international expertise in the form of foreign workers will improve our standards, skills and practices, contacts and innovative ideas. International knowledge transfer and capacity building will complement local knowledge and expertise and create a synergy, which will be beneficial for the future of the economy.
From an economic standpoint, 2022 is looking bright for Mauritius so far: opening of our borders, trade picking up gradually, providing resources to youngsters, improving infrastructure, new opportunities in business activities; it is a matter of time before Mauritius reap the benefits of those initiatives. All the measures aim at strengthening the Mauritius International Financial Centre, but it all depends on the implementation of the measures proposed. If done right, we will be looking at Mauritius as a business hub for the world.