Gateway to Africa
Africa is the continent with the world’s fastest growing population, and in the next decade its gross domestic product is expected to rise by an average of six per cent a year.1 Africa’s growth story and the predictions that it will outpace the Asian economy are now convincing Afro-pessimists to revise their opinions and recognise the value and potential of this region, now dubbed ‘the hopeful continent’.
There are many reasons to invest in Africa, including increasing foreign direct investment (FDI) flows, impressive growth of GDP and the continent’s vast natural resources. Organisations support this vision of Africa and many have been using Mauritius as a window for offshore investment.
Mauritius is making a huge impact in overseas markets, with positive spill-over effects in Africa and Asia
An ideal platform
Mauritius is situated 2,000 kilometres off the southeast coast of the African continent and has ideal characteristics to act as a platform for outward investments. Its geographical position and strategic time zone within African working hours allow Eastern and Western countries to perform timely business transactions. It is a bilingual country, allowing ease of communication with an understanding of African cultures. It is easily accessible, with frequent air links to major Asian, African and European countries.
Mauritius has long been the trusted investment route and is the centre for offshore financial services and banking in the southern hemisphere. Boasting an excellent business environment in Africa and deservedly ranked the best sub-Saharan economy for ease of doing business by the World Bank,2 Mauritius is making a huge impact in overseas markets, with positive spill-over effects in the Africa-Asia trade corridor.
Figure 1: International benchmarks for Mauritius
High economic standards
Despite various worldwide fiscal crises, Mauritius has maintained an excellent economic record. The island was ranked first in the African region and 19th globally in the World Bank Ease of Doing Business 2013 survey. The island benefits from an ideal ranking in Africa from several indexes, showing that it provides a solid platform for outward investments. Mauritius is ranked first in Africa by the Forbes survey of Best Countries for Business 2011 and second in the Africa Competitiveness Index 2011.3 China and India are already using Mauritius as a jurisdiction of choice for investment holding companies in banking and treasury management, and as a base for key professional staff doing business across Africa.
Network of treaties and agreements
Mauritius is long-established as a leading banking intermediary for foreign investment into India, due to close cultural ties with the subcontinent and favourable double-taxation agreements. Over the past decade, it has administered more than USD50 billion in FDI flows to India and holds about 40 per cent of global FDI flow to India. Mauritius has developed strong economic and cultural ties with Africa and Asia over the years, and is becoming increasingly well-known and used as a trade and financial gateway to these continents. Furthermore, Mauritius has established tax treaties with 16 African states and is party to a series of treaties under negotiation.4 Mauritius offers numerous fiscal advantages. It taxes all companies at a rate of 15 per cent and has an extensive network of double-taxation-avoidance treaties. The treaties signed by Mauritius are based on the OECD model and work by limiting or eliminating tax in the source country and reducing the withholding taxes on income received by the Mauritius-based investors. It has flat investment promotion and protection agreements (IPPAs) with 16 African countries (with effective tax credit for certain types of companies), providing for free repatriation of investment capital and returns, guarantee against expropriation, and compensation for losses in case of war, armed conflict or riot. The IPPAs further provide arrangements for the settlement of disputes between investors and contracting states.
Mauritius has preferential market access to the following economic areas: the EU, under the Cotonou Agreement, creating opportunities for investment, creation of workforce and increasing international competitiveness; the US, under the African Growth and Opportunity Act (AGOA), allowing duty-free access to the US markets for over 7,000 products; and Africa, under the Common Market for Eastern and Southern Africa (COMESA), which eliminates customs duties on imports, and the Southern African Development Community (SADC).
There are many advantages to investing through Mauritius, including:
- Availability of legal, accounting and finance professionals in addition to highly credible banking institutions with global links.
- Guaranteed political stability, ensuring a parliamentary democracy according to the westminster model.
- Modern legislation and effective regulation, with a system based on a hybrid of French and English laws.
- Strong and diversified economy with well-developed communications infrastructure.
- Membership of the African union and the Indian Ocean Rim Association for Regional Cooperation, which provide exemptions from custom duties on
- goods and equipment traded among member countries.
- An OECD whitelisted jurisdiction.
- No exchange control, and free repatriation of profits and capital.
From emerging continent to a developed continent
A few years ago, Africa’s ability to sustain its momentum was questioned. Today Africa is keeping true to the predictions and assumptions of Afro-optimists, and is well on its way to writing an unflinching success story and becoming the driver of the growing BRIC economies.
As forecasts are noting increases in FDI and GDP of Africa,5 Mauritius remains the main contributor to the hope that the African continent can bring in terms of the global economy and capital markets.
Africa’s growth is a promise. It is a reminder of the transformative potential of growth that any skilled economist cannot deny. With the opportunities that lie ahead, as we embark on a new decade of change, it is essential to gain economic presence and conquer these new markets. Mauritius is the ideal regional international finance centre for fulfilling this promise and aiding the economic development of Africa.
- 1. The Economist; International Monetary Fund
- 2. World Bank Ease of Doing Business 2013 survey
- 3. Mauritius Board of Investment
- 4. The treaties currently in force with African countries are with: Botswana, Swaziland, Lesotho, Uganda, Mozambique, Zimbabwe, Namibia, Tunisia, Rwanda, Zambia, Senegal, Nigeria, Seychelles, Kenya, South Africa and Madagascar
- 5. United Nations Conference on Trade and Development
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