Ken Poonoosamy (Deputy CEO, Economic Development Board) – “Mauritius is well positioned to be the bridge linking Asia and Africa”

The Economic Development Board of Mauritius has been created through the merger of three key institutions, the Board of Investment, Enterprise Mauritius and the Financial Services Promotion Agency. Its priority is to position Mauritius as a regional platform for investment in Africa. Its Deputy CEO Ken Poonoosamy shares some key figures and perspectives following the 2018-2019 Budget speech.

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BUSINESS MAGAZINE. The 2018-2019 Budget speech puts trade and investment with and within Africa in the limelight. Has Mauritius secured a strategic position in this regional trade context?

Mauritius emerged as an outward investor in the 1990s with annual outflows averaging Rs 400 million which have risen over the years. The Mauritius International Financial Centre (IFC) has developed into a regional platform and is assuming a prominent role in driving investment into Africa. Besides, more than 450 private equity funds are domiciled in the Mauritius IFC and investing in the African continent. For the year 2016, total inbound investments in Africa stood at USD 59 billion, out of which nearly 50% went through Mauritius. In 2017, nearly USD 30 billion investments directed to Africa were structured through Mauritius.

The outward direct investment (ODI), last year, was to the tune of Rs 2.5 billion, representing a 38% increase compared to 2016. Our records show that Mauritian companies have set up around 120 business units across 24 countries in Africa. So, it is evident that Mauritian-owned assets in Africa are bringing economic dividends to our country and will continue to do so on the long term.

The 2018-2019 budget provides for increased incentives and new cross-border investment opportunities for entrepreneurs. For instance, project developers and project financing institutions collaborating with the Mauritius Africa Fund and who will invest in improving the Special Economic Zone (SEZ) infrastructure will benefit from a 5-year tax holiday. Also, through the Africa Infrastructure and Industrialization Fund, investment in the SEZs will be further supported.

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BUSINESS MAGAZINE. Which African countries are favoured by Mauritian investors and entrepreneurs?

Countries like Kenya, Mozambique, Madagascar and Reunion island have attracted significant investment. In 2017, Outward Investment was geared primarily in the financial services sector (44%), manufacturing sector (24%) and real estate activities (23%). 

BUSINESS MAGAZINE. What are the development perspectives in trade and investment?

With the shift in the economic gravity from West to East, Mauritius is well positioned to be the bridge linking Asia and Africa. The fast-changing socio-economic landscape of Africa bodes well for Mauritian enterprises having an interest to set to expand their business operations in Africa. Africa’s population is expected to double by 2050 to reach nearly 2 billion. The continent boasts 13% of the world population, with over 50% under the age of 20. It has over 30% of the world minerals reserves and around 60% of world’s arable land.

Besides, the establishment of the Continental Free Trade Agreement (CFTA) will boost trade prospects within the continent. Spending by African households is estimated to rise from USD 840 billion in 2008 to USD 1.4 trillion in 2020. With rapid urbanization, projected to reach 50 per cent by 2035, 700 million housing units will be required within the next 30 years. The World Bank recently published that Africa is where China was 30 years ago, and India was 20 years ago and looking at the high GDP growth that both have experienced for the past 20 years, it is evident that Africa will be the main contributor to the world’s economic growth in the medium to long term. The World Bank estimates the finance gap for Africa to reach its full potential is around USD 130-180 billion annually over the next decade.

Hence, it is crucial that Mauritius builds its International Financial Centre to capture the bulk of projects and investments aimed at building the infrastructure and capacity for Africa.

BUSINESS MAGAZINE. What is the role of the Economic Development Board in consolidating the position of Mauritius in the trade and investment area for the African region?

Mauritius is seen as a model of stability and economic prosperity in the region and envisions to consolidate its position as a regional platform. The consolidation of the Mauritius IFC, the advanced  logistics network and ensuring adherence to global best practices in doing business remain the key objectives of the EDB.

The new structure of the EDB, that is, the Investment and Trade Facilitation Directorate, the Strategic Planning and Economic Development Directorate, and the E-Licensing & Ease of Doing Business Directorate, is focusing on building the attributes of Mauritius as a reputed and effective trade and investment platform for the continent. The success is evident by the progressing presence of clusters of Mauritianbased operators such as banks, sugar producers, textile operators and professional service providers, be it in the educational sector, legal, Financial or ICT services across 24 countries on the continent. The EDB is also expanding its network across the continent through MoUs with African Investment Promotion Agencies (IPAs) and positioning Economic Counsellors in selected capitals on the continent.

The EDB also holds the directorate for sub-Saharan Africa with the World Association of Investment Promotion Agencies (WAIPA). To that end, the EDB in association with WAIPA will host the 3rd edition of the Africa Partnership Conference later this year. This third edition’s focus is to bring together project promoters, investors and project financiers.

However, we should note that there are various factors to consider when establishing business in Africa. Non-tariff barriers, red tape, corruption and poor understanding of the economic landscape are major hurdles to the conduit of business on the continent.

BUSINESS MAGAZINE. Can investors and entrepreneurs expect support to overcome hurdles and mitigate risks?

It is imperative for operators to grasp an understanding of the evolving risk landscape before venturing into the continent. To further facilitate outward Investment, the government of Mauritius is keen to mitigate some of the risks through its membership to the Multilateral Investment Guarantee Agency (MIGA) and the wide network of bilateral agreements. In addition, the freight rebate scheme helps in reducing the financial burden of Mauritian-based exporters to Africa. It is important that for any project in Africa, a comprehensive study is undertaken to better understand the political, legal, economic and cultural risks associated.

BUSINESS MAGAZINE. How is Mauritius ensuring protection of investment and what is its strategy to strengthen its position within the African Union? 

With 21 Double Taxation Avoidance Treaties (DTAs) and 23 Investment Promotion and Protection Agreements (IPPAs) already signed with African states, Mauritius can offer investors a conducive environment for doing business.

Africa is 55 countries, now with Morocco a member of the African Union (AU) again. With the multi-speed development and heterogeneous environment, it is evident that we cannot support operations across all 55 states. As such, at the level of the EDB, a priority matrix based on political and diplomatic relations, geographic reach, connectivity and ease of doing business has been compiled, in line with the strategy of Ministry of Foreign Affairs, Regional Integration and International Trade and the Ministry of Finance and Economic Development. This is the basis for country selection in signing G2G (government to government) agreements, including the implementation of SEZs, the setting up of Permanent Joint Commissions across Africa and exploring trade and investment potential in these countries.

In addition, as a member of regional economic blocs such as the Southern African Development Community (SADC) and Common Market for Eastern and Southern Africa (COMESA) and as member of the AU, Mauritius is constantly playing an active role in enhancing and fostering diplomatic and economic cooperation within African countries.

More recently, to further boost intra-regional African trade and investment, Mauritius supported the Tripartite Agreement between SADC, COMESA and the East African countries. Mauritius was also among the 44 countries out of the 55 Member States of the AU to have signed the CFTA.

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