Conduits of Capital

3. FINDINGS
3.1 Evolution and Comparison
of African Financial Centres
Figure 1 - African financial centres by number of
mentions across the five reports
Mauritius is the financial centre most cited in the reports,
followed in order by Nairobi, Johannesburg, Botswana,
and Casablanca. Mauritius is widely recognised as an
established offshore financial centre specialising in fund
domiciliation and related support services. Most reports
agree that Mauritius is likely to remain an important financial
centre servicing funds and investment flows between Africa
and Asia. Lion’s Head suggests that there is limited scope
in replicating this model with a new onshore financial centre
or to compete directly with such an established centre,
while Z/Yen suggests “Djibouti, Botswana, Gabon, and the
Seychelles might make a larger play to be international
financial centres if they so desired.”
Fuchs, and to some extent Z/Yen, suggest that access to local
authorities and decision-makers might be a comparative
advantage of onshore financial centres compared to offshore
financial centres. This potential is hindered however by
the relatively small size of their financial systems and their
relatively high degree of fragmentation.
Table 5 summarises the experts’ leading candidates for
larger regional financial centres.
Table 5 – Leading African onshore financial centre candidates
African Financial Centre
Bella Econsult
Lion’s
Fuchs
Research Botswana
Head
Z/Yen
Casablanca (Morocco) X X X
Gaborone (Botswana) X (X) (X)
Johannesburg / Cape Town (South Africa) X X X X X
Lagos (Nigeria) (X) X X
Nairobi (Kenya) (X) X X X
Bella Research believes that Mauritius is likely to continue
to be favoured by private equity groups for domiciliation.
Their report suggests that South Africa and Botswana
could provide a credible alternative provided that the former
enhances its quality of governance (including political
stability and security) and improves the terms of its tax
treaties; and the latter simplifies its regulatory environment
to become more conducive to business activity.
Econsult Botswana finds that the most compelling financial
centre jurisdiction for international funds besides Mauritius
is South Africa due to its size, financial sophistication, and
infrastructure, but suggests that the country should work on
improving exchange controls, taxation, immigration laws,
and a reduced crime rate. The report suggests that other
possible contenders, including Botswana, Nigeria, and
Kenya, could grow in the future, provided that they work on
improving conditions for a successful financial centre.
Conduits of Capital – Onshore Financial Centres and Their Relevance to African Private Equity
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