Kamal Hawabhay : “South Africa remains an attractive market for us despite facing challenges”

India is now Africa’s third-largest trading partner, after china and the European union. this substantial figure highlights the significant business activities between the two regions, making it an attractive opportunity for GWMS to focus on facilitating and managing India-outbound business and investment to Africa.

What were the main motivations behind your decision to explore the markets of the African continent and the Indian Ocean islands to develop your business?

The report, titled “2023 Africa Wealth Report”, published by Henley & Partners in April 2023, found that there are currently 138,000 high-net-worth individuals (HNWIs) with investable wealth of USD 1 million or more living in Africa, along with 328 centi-millionaires worth USD 100 million or more, and 23 US dollar billionaires.

The report also found that the number of HNWIs in Africa is expected to grow by 42% over the next decade, reaching 194,000 by 2032 and the “Big 5” wealth markets in Africa — South Africa, Egypt, Nigeria, Kenya, and Morocco — together account for 56% of Africa’s HNWIs and over 90% of the continent’s billionaires. Similar publications have been steadily reporting the increasing weight of specified African countries’ progress in either their economies or in the number of HNWIs since the past several years.

GWMS Ltd operates in the Mauritius International Financial Centre (MIFC) and the above facts were and are motivating and enticing enough for us to direct our attention and efforts towards the African continent. Another significant reason behind our shift of focus from our previous main market, India, to Africa is the amendment to the India-Mauritius Double Taxation Agreement (DTA) which has complicated India-bound business, to say the least!

The India-Africa trade and investment relations have witnessed remarkable growth over the past decade, with trade volumes reaching substantial levels. According to the World Bank, the value of India-Africa trade has grown from $7 billion in 2000 to $70 billion in 2022. This represents an average annual growth rate of 15%. India is now Africa’s third-largest trading partner, after China and the European Union. This substantial figure highlights the significant business activities between the two regions, making it an attractive opportunity for us to focus on facilitating and managing India-outbound business and investment to Africa, particularly given Mauritius’ role as a strategic gateway for Indian investments into the African continent.

In addition, the following factors have contributed to our positioning:

• Proximity and Regional Expertise: With its base in Mauritius, strategically positioned to act as both corridor and gateway between Africa and Asia, we possess a unique advantage in understanding the intricacies of the dynamics of both these markets. Leveraging its proximity and knowledge of the Mauritius International Financial Centre (MIFC) business environment, the company has been well equipped to extend its services to a number of countries.
• Rising Demand for Corporate Services: As global business activity continues to expand into new territories, the demand for reliable and proficient corporate service providers has surged.
• Reputation and Trust: Over the past twenty years, GWMS Ltd has earned a reputation for its professionalism, reliability, exceptional client service and commitment to quality standards. This has cemented trust and credibility and has served as a solid foundation for the company to explore new markets. The positive feedback and referrals from existing clients further bolstered our confidence in expanding its business footprint.

We recognized the increasing need for our expertise in company formation, compliance and fiduciary services in the African continent. Expanding our operations to these markets was a natural response to meet this growing demand.

What specific countries or regions have you targeted for expansion, and why?

Our decision-making process has been largely driven by the evaluation of the following factors: market potential, competitive landscape, regulatory considerations, trade agreements and treaties.

South Africa remains an attractive market for us despite facing challenges. While South Africa may be going through a tough time, it also presents significant opportunities given that it is one of the largest economies in Africa, offering a sizable and diversified market for various industries. The challenges in South Africa do indeed present opportunities for the Mauritius IFC. Our expertise in cross-border structuring, tax optimization, and regulatory compliance enables us to assist investors in navigating the complexities of the South African market while leveraging Mauritius’ favourable tax regime and financial services to enhance their investments. In West Africa, countries such as Nigeria and Ghana have caught our attention for their sizeable and growing economies, expanding middle-class populations, and numerous investment opportunities in sectors like oil and gas, agriculture and technology. In East Africa, we have our eyes on Kenya and Ethiopia due to their stable political environments, growing consumer markets and a surge in foreign direct investments. These countries’ promising business climates and potential for growth make them ideal targets for our expansion efforts in the Africa region.

What are the key sectors or industries you are targeting in these new markets?

As a sector-agnostic management company expanding into African markets, we prioritize opportunities with high foreign direct investment opportunities and potential for cross-border structuring. We target industries like telecommunications, green energy, agriculture, manufacturing and technology. We also offer corporate finance solutions by sourcing financing options from Mauritius-based financial institutions and accessing foreign debt funds through our corporate finance partner based in Berlin, Germany. For instance, we may assist say an Indian tech firm in acquiring an African startup by leveraging the Mauritius’ financial & banking hub status and optimizing tax arrangements for their expansion into East Africa.

What specific challenges have you encountered in expanding to these regions?

Expanding to these regions has presented several challenges which include: cultural and business relations, establishing brand presence, regulatory and legal complexity, market understanding and research and competition.

A major hurdle is navigating the complex regulatory environments and differing legal frameworks across African countries. Currency fluctuations and managing cross-border transactions pose financial risks. Building local partnerships and understanding market dynamics demand time and effort. Despite these challenges, our firm commitment to compliance and due diligence, expertise and agility in providing solutions through the Mauritius International Financial Centre (MIFC) has enabled us to progress in the vibrant African markets.

What strategic partnerships have you established with local players to facilitate your growth in these markets?

We predominantly work with local advisors who are members of the network to which we belong. Each member accedes to membership through a rigorous process of due diligence. We therefore trust our colleagues and feel confident to refer our clients to them as they possess in-depth knowledge of their respective markets. These local players are instrumental in providing us and our clients with highly valuable insights, facilitating market entry and navigating regulatory complexities. Leveraging their expertise allows our clients and us to build strong foundations in the African markets.

What competitive advantages have you put forward to set yourself apart from local companies already established in these regions?

As a Management Company based in Mauritius expanding into African markets, we offer several competitive advantages. Firstly, our Managing Director, Kamal Hawabhay, is a Chartered Accountant (South Africa) and he is well versed with the international tax aspects of South African tax laws and those of Mauritius. Our South African clients can thus benefit from a holistic assessment of their affairs rather than an off-the-shelf solution. Our expertise in international corporate and tax structuring positions us as a reliable bridge between global investors and the African region. Secondly, our location in Mauritius, a well-regulated and reputable financial hub, provides tax-efficient structuring solutions and access to double taxation avoidance treaties (DTAAs) and investment promotion and protection agreements (IPPAs) making routing of business & investments through Mauritius more attractive for our clients. Thirdly, our extensive network of local advisors and associates in various African countries enables us to offer on-the-ground expertise and insights, ensuring seamless market entry and navigation of regulatory landscapes. Lastly, our exclusive membership in GMNI further enhances our credibility and access to quality professional services, reinforcing our commitment to delivering tailored and comprehensive solutions to our clients.