Ravin Dajee, Managing Director for Absa Mauritius, speaks about how Mauritius can strengthen its role in facilitating investments into the continent, attract the right talent with targeted capacity building efforts, as well as entrench itself as a banking hub for the continent.

He also comments on how Absa can act as a ‘force of good’ for Africa based on its ‘Africanacity’ philosophy, that puts innovation, passion and tenacity at the heart of the pan-African banking major’s operations.

You recently spoke at the 5th Pension Funds and Alternative Investments Africa conference hosted in Mauritius, where you commented that Mauritius could act as a bridge for different corridors of investment into Africa. How can Mauritius strengthen its role in facilitating investments into the continent, and how can Absa support this?

Over the past two decades, Mauritius has gained a global reputation as the preferred gateway for investment into (and out of) Africa. The value of an IFC is largely reputational, and Mauritius has met expectations by ensuring a strong legal and regulatory framework, good corporate governance, an array of modern financial products and services, and global connectivity, not to mention competitive operational costs.

Mauritius is located in the Indian Ocean, with a convenient time zone (GMT+4), that connects global financial centres such as London, Dubai and Singapore. As a vibrant financial centre, the island has flourished on the back of favourable tax regimes, bilateral tax treaties, a robust legal and regulatory framework, a broad ecosystem catering to global corporates and investors and a talented labour force (especially in accounting, legal, structuring, banking and fund administration).

In addition, Mauritius has an open capital account with minimal capital controls, which is among the highest in the world. Driven by inflows in the Global Business sector, net international capital and financial flows have been around 26% of GDP in 2021 (source IMF). By maintaining a flexible exchange rate regime, Mauritius has accumulated FX reserves, and its reserves adequacy metrics have been strong despite the pandemic.

At Absa, our Global Markets offerings include financial products and tailor-made services to institutional clients. The products include FX trading in G10 and 10 SSA currencies (South Africa, Kenya, Nigeria, etc.), collateralised financing, innovative structured investment and risk management solutions.

Absa Mauritius’ global reach in finance and business today was developed out of a carefully laid out networking strategy. As a member of the Absa Group, Absa Mauritius enjoys an extensive footprint across Africa with 10 African markets and representative offices in four countries (UK, USA, China and Middle East). Furthermore, the Group’s partnership with Société Générale extended the bank’s presence across 27 markets in Africa, giving it the ability to offer simplified engagement across the African continent.

Absa Mauritius leverages its 100-year experience and proven savoir-faire as an active player in Mauritius’ economy, from offshore operations to tourism, aviation, manufacturing, agriculture and other sectors.

After being established as a pioneer in Mauritius offshore banking, the bank launched a digital transformation strategy that has resulted in the introduction of ground-breaking solutions for businesses. Absa Mauritius now offers a suite of highly secure online banking support services, with the aim to better cater for a wide array of its clients’ banking needs, from the simplest to the most complex. The bank’s digitally-driven strategy has given Absa Mauritius the opportunity to lead the way with industry firsts on the local front, such as with Host-to-host and SWIFT solutions.

The bank also launched its Absa Access single sign-on platform that gives clients access to multiple channels and greater visibility on their business portfolio. By logging in through this new service, clients can enjoy the advantages of Trade Management Online, a state-of-the-art Trade platform for businesses to proceed remotely with their import and export requirements, without having to leave the home or office.

 

You commented that operators in the pensions sector are facing the same problem of a long liquidity perspective and a short pipeline for assets, and noted some common issues being faced by the industry, such as inflation, interest rates, shortage of skills and talent attraction. You also emphasised that managing perception is key, as operators have a duty to ensure they are doing the right thing from a governance perspective. How can these issues be addressed or managed?

The global economic backdrop is becoming complicated for asset owners in the pension fund industry. In many counties, pension funds are facing the same basic problem, that is, mismatch between assets and liabilities. Mauritius being an ageing population is proving challenging for private pension schemes.

The high inflation is eroding the return of fixed income investments. Some pension funds have reduced their fixed income portfolio while allocating more to inflation-protected investments such as real assets which include real estate, commodities and infrastructure. Global equities have already entered a bear market because of tighter monetary policies in advanced economies. In the US, the Federal Reserve could engineer a recession to restore price stability below their 2% inflation target.

 

How do you see the opportunities to attract talent to Mauritius?

While Mauritius has a well-educated workforce, there is a shortage of talent in the higher end of financial services such as asset and wealth management, structured finance, capital markets and investment banking.

Local pension funds require innovative solutions to manage the gap between their assets and liabilities. We need talents who display creativity, innovation and intellectual humility. 

The impact of good governance for asset owners on performance and investment management can be substantial on the outcomes for the beneficiaries. Selecting the right governance structure would ensure that the pension trustees can make timely investment decisions, access advice from Fund managers and implement the investment strategy efficiently.

One may have the best talent and investment ideas, but without an airtight governance framework, it will be difficult to make sustainable returns for the pension-fund beneficiaries.

Airtight governance may include clear delegation of authorities between board, investment committees and fund managers, well-defined accountabilities, and leadership by individuals with the right expertise, integrity and skills.

Mauritius can definitely strengthen its role in facilitating investments into the continent by putting capacity building high on the agenda to keep the competitiveness of the jurisdiction. Mauritius’s strategic positioning of doing business gives an ‘inside knowledge’ competitive advantage over alternative IFCs when considering investment into Africa. However, we keep on facing certain constraints such as brain drain and lack of resources. Unfortunately, our talented and educated workforce is getting recruited by other IFCs, namely Luxembourg, Jersey, etc.

Mauritius can also step forward in this endeavour by promoting itself as an IFC. While the jurisdiction is promoted as a whole, the IFC needs further specialised promotion, that is, business diversification and targeting the Far East Market. This will help businesses to expand into markets and industries that they haven’t explored.

 

You mentioned that Absa is present in around 10 countries, most of which it has been in for more than 100 years. How do you see the landscape for cross-border banking services evolving in Africa, and to what extent can Mauritius act as a banking hub for the continent? Are you seeing any impact from the implementation of the African Continental Free Trade Area (AfCFTA) in terms of customer demand and, if so, how?

Absa Mauritius plays an important role to support our continent’s growth ambitions and Absa Group’s objectives.

From a liability and deposit perspective, the Global Business segment at Absa Mauritius is the largest contributor to USD funding among all of Absa’s subsidiaries, demonstrating the strength and reputation of our bank globally and on the African continent. In that respect, we act as an efficient and transparent platform for capital flows in and out of Africa to fuel several key sectors, including energy, renewables, infrastructure, tourism, agriculture, etc.

From a financing perspective, Absa Mauritius leverages its strong USD funding base through Global Business deposits and competitive funding from commercial and development financial institutions to serve as banking hub to Absa subsidiaries. In other words, we can provide cost-effective financing to clients who already bank with Absa’s subsidiaries and we act as an enabler for the development of key services for the socio-economic growth of our continent. Key recent successes include provision of trade finance services for the development of reliable and sustainable power in Ghana.

 

The Absa brand has now been present in Mauritius for just over two years, launched just weeks before the pandemic broke in the country. How would you describe the journey of Absa in Mauritius to date and how is the bank’s strategy guided by the philosophy of ‘Africanacity’?

Absa Mauritius’ upmost priorities remain to place the customer at the heart of its strategy, be forward-thinkers and act as a “force for good” in the community.

As stated in our Africanacity philosophy, we are ‘doers’ and we take up challenges with creativity and ingenuity. We believe in innovation, passion, and tenacity. We reacted swiftly to the pandemic impact and anticipated the shift in customers’ needs, by providing them with safe and contactless solutions to transact remotely. The bank chose to accelerate the Digital Transformation Journey which formed part of our initial development strategy. Over two years, a series of solutions were launched for our customers, from Retail to SMEs and large corporates. Absa Mauritius is among the first banking institutions to have come up with the following initiatives in Mauritian banking; WhatsApp banking, contactless withdrawals at ATMs and the Host-to-Host secured payments for large companies. More recently, we went a step further in with our Absa Access single Sign-On platform which provides the client with a comprehensive view of Corporate Banking.

Alongside this, the bank promoted “phygital” banking, for a right balance between the digital and the physical worlds of operations. We also worked on restructuring and digitalising back-end processes and on improving turnaround time. In short, we are establishing a business model with an agile structure that is fit for the future. A lot of investment was made in terms of talent and capability building for our teams, while affirming our role as a responsible player in our society, with sustainable bank practices and clear CSR objectives. We are determined to keep an innovation path, to serve the customer in the best possible way, in Mauritius, Africa and beyond.