GlobalFinance-issue 4 27 Dec16

Mauritius International
Financial Centre
A Global Finance Mauritius Publication • December 2016 • Issue 4
Banking
Opportunity for debt
structuring through
Mauritius
Product Development
Can Mauritius
become the
FinTech hub of
Africa?
Government
and Regulatory
What is the outlook
for trade agreements
post-Brexit?
Interview : Harvesh Seegolam
“Potential investors
and players are
excited about our new
offerings”
Time for a
new chapter

Mauritius | Singapore | South Africa
Cim Global Business is the umbrella brand name for Cim Fund Services Ltd, Cim Trustees Ltd and Cim Corporate Services Ltd which are companies duly licensed and regulated by the Financial
Services Commission (Mauritius).
mauritius@cimglobalbusiness.com

EDITORIAL
Now is our moment,
now is our opportunity
It is high time for a new chapter. For too long, the
global business sector in Mauritius has faced uncertainty
on account of the Mauritius-India DTAA.
Now that we have the certainty of the outcome,
it is time to move forward, taking into account the
new reality which will unfold over the coming years,
particularly in the area of debt structuring, given that
the size of the debt market in India dwarfs that of the
equity market. Our sector needs to be agile enough to
adapt to the new circumstances, and to look for new
opportunities.
So where do we go from there, and what are the challenges
ahead and the opportunities to be unlocked?
We need to stay ahead of the curve, to be proactive,
putting our best efforts together and react promptly
to events. There is no doubt that some of the issues
that we face may have significant consequences for
our sector. Discussions have already begun about
the future of the Deemed Foreign Tax Credit (DFTC)
which discriminates between domestic and global
business companies, and as a matter of fact should
be replaced while maintaining our value proposition
and competitiveness. Recently, the timetable for the
creation of a consolidated EU tax blacklist has been
confirmed, with a proposal to be presented in Q3
2017 On the same line, the Finance Minister led a
delegation to Brussels with a loud and clear message
that Mauritius is strongly committed to dealing with
cross-border tax evasion and other malpractices. The
fact that Mauritius has already implemented FATCA
and is implementing the Common Reporting Standard
(CRS) for Automatic Exchange of Information in
2017, and has also committed to participate in the
OECD/G20 Inclusive Framework on Base Erosion and
Profit Shifting (BEPS), demonstrates our country’s determination
to ensure transparency and best practice
in line with international standards.
The Government of Mauritius is bringing forward new
initiatives to diversify and grow the financial services
sector. The Financial Services Promotion Authority
(FSPA) has been re-activated. Soon after it created a
visual identity for the Mauritius International Financial
Centre (IFC) and has made huge strides forward in
re-branding Mauritius as an IFC of repute. The National
Budget 2016-2017 contained bold initiatives to intro-
duce new licences to attract more market entrants in
the areas of investment banking and asset management,
to bring in global law firms, and to facilitate the
establishment of Regional Treasury Centres, Global
Headquarters and Overseas Family Corporation offices,
amongst others. The new Regulatory Sandbox
Licence demonstrates that Mauritius is open to innovation,
and that it can also be a hub for Fintech, if the
right enabling environment can be put in place. The
launch of the Financial Services Institute (FSI) is a very
welcome initiative, which is already seeking to address
the mismatch between graduates’ skills and the industry’s
needs. The FSI will play a key role in capacity
building for our industry in the future.
Where are we heading? All eyes are now on Africa.
Recent figures from the Financial Services Commission(FSC)
highlight that already the majority of Global
Business Companies are sending outward investments
to Africa, and the Government of Mauritius is also putting
increasing emphasis in this direction. China also
represents a huge opportunity for Mauritius, with the
recent establishment of the Bank of China in the country,
marking a huge step forward in bilateral relations in
financial services. China has the fastest growing number
of new High Net Worth Individuals (HNWIs) in the
world, according to Capgemini’s World Wealth Report
2016; while the Demand Institute has identified that
there is huge unmet demand among Chinese consumers
for financial services products. A recent Mauritian
government delegation to China attracted great interest,
which bodes well for the future.
So, now is the time for us to boost our offering, which
will create more substance and move away from
plain vanilla products. A new chapter is waiting to be
written on the next phase of the economic success
story of Mauritius, where financial services will move
beyond the current contribution of 12% of GDP and
will reinforce its position as a backbone of our economy.
There is a need to demonstrate ability and confidence
in providing competitive world class services
and to really innovate in our sector. So let us set out
on delivering the goal of making our financial services
sector a recognised IFC. We must seize, without
delay, the strategic moment and move decisively as
we have everything to play for.
By Samade Jhummun,
CEO Global Finance Mauritius
Mauritius International Financial Centre
3

Mauritius International
Financial Centre
A Global Finance Mauritius Publication
December 2016 • Issue 4
Time for a
new chapter
Acknowledgements
This 4 th issue of Mauritius International Financial
Centre was prepared by Global Finance Mauritius with
the assistance of Advantedge Public Relations.
CONTENT
Mauritius International
Financial Centre
A Global Finance Mauritius Publication • December 2016 • Issue 4
Banking
Opportunity for debt
structuring through
Mauritius
Government
and Regulatory
What is the outlook
for trade agreements
post-Brexit?
Interview : Harvesh Seegolam
“Potential investors
and players are
excited about our new
offerings”
Product Development
Can Mauritius
become the
FinTech hub of
Africa?
Time for a
new chapter
On the cover
Time for a new chapter
The Financial Services’
transformation augurs well
for a promising future.
Read page 11
Global Finance Mauritius expresses its gratitude
to all of the contributors to this publication.
Assad Bhuglah (former Director of Trade Policy at the
International Trade Division, Ministry of Foreign Affairs,
Regional Integration and International Trade, Mauritius)
Richard Etemesi (Standard Chartered)
Mahen Govinda (ABAX)
Gyaneshwarnath Gowrea (CIM)
Mohamed Khan (FSI)
Ndanga Kamau (LCIA-MIAC Arbitration Centre)
Sudhamo Lal (MRA)
Dean Lam (HSBC)
Kate Lander (Fitch Learning)
Anthony Leung Shing (PwC)
Rajiv Lutchmiah (LCF Securities)
Shamima Mallam-Hassam (CIM)
Mark O’Sullivan (Interpaytech)
Guillaume Passebecq (AfrAsia)
Harvesh Seegolam (FSPA)
Mikir Shah (AXA)
Mark Roberton (Palm Captive Management Mauritius Ltd)
16
6 OVERVIEW
OF GLOBAL FINANCE MAURITIUS
8 COVER STORY
14 INTERVIEW
CHIEF EXECUTIVE OF FSPA
HARVESH SEEGOLAM
16 ARBITRATION
Mauritius International
Financial Centre is a publication
of Global Finance Mauritius
1st Floor, Cyber Tower 1
Ebène, Mauritius
Tel: + 230 464 84 09
Fax: +230 464 83 88
Email: publications@globalfinance.mu or info@globalfinance.mu
www.globalfinance.mu
20 PRODUCT DEVELOPMENT
INSURANCE CAPTIVES
22 CAN MAURITIUS BECOME THE
FINTECH HUB OF AFRICA
24 FSPA: SPEARHEADING THE
DEVELOPMENT OF THE
MAURITIUS IFC
4 December 2016

24
MAURITIUS34 38
46
64
26 VALUE ADDED SERVICES
31 INSURANCE
34 REGIONAL TRADE
THE BELT AND ROAD INITIATIVE:
ELEVATING TRADE IN THE REGION
38 BANKING
TRANSFORMING
TRADE IN AFRICA
41 OPPORTUNITY FOR DEBT
STRUCTURING THROUGH
MAURITIUS
46 PRIVATE BANKING
51 GOVERNANCE AND REGULATORY
AUTOMATIC EXCHANGE
OF INFORMATION
54 MAURITIUS CONTINUES TO
DEVELOP ITS FINANCIAL CENTRE IN
LINE WITH INTERNATIONAL NORMS
57 WHAT IS THE OUTLOOK FOR TRADE
AGREEMENTS POST-BREXIT?
60 CAPACITY BUILDING
EDUCATION IS KEY WHEN STRIVING
FOR GROWTH
62 FSI AS A DEMAND-DRIVEN
TRAINING INSTITUTION
64 CAPITAL MARKET
Mauritius International Financial Centre
5

GLOBAL FINANCE MAURITIUS
Promoting the development
of a competitive
financial industry
From Left to Right : Board Members 2016-2017: Friedrich Phillips (alternate of Dean Lam Kin Teng),
Anthony Leung Shing, Richard Arlove, Paul Leech, Ben Lim, Samade Jhummun (Chief Executive Officer), Sunil
Benimadhu and Aisha Timol, In absentia Dean Lam Kin Teng, Uday Gujadhur and Kamil Patel.
6 December 2016

Global Finance Mauritius (GFM) is the apex body representative and
broad-based financial services association in Mauritius. It brings together
leading players in the realm of Global Business, which comprises of banks,
management companies, accounting firms, law firms and institutional
investors, the Stock Exchange of Mauritius and other licensees of
the Financial Services Commission (FSC). We have a common goal of
developing Mauritius as an International Financial Centre of substance.
Since its inception in 2010, GFM has played a crucial
role in contributing and shaping policy and regulatory
frameworks in Mauritius, in the interests of its members,
with a view to reinforcing the position of the jurisdiction
on the international stage to attract new business and market
players, and ensuring that the offer of the financial services
sector is in line with emerging trends and opportunities.
Maintaining professional and ethical standards
In terms of our objectives, we provide a forum for our members
to debate issues of broad concern to the sector. We seek to advance
knowledge in learning in relevant areas, and to organise
conferences and meetings. We undertake research on key topics
of common concern, and in recent months we undertook a survey
of the impact and likely implications of the revised Protocol
on the India-Mauritius DTAA, which was also shared with the relevant
government authorities. We have a strong focus on maintaining
professional and ethical standards through education and
training, and are in the process of developing new training partnerships
as part of our service to our members.
GFM is fully recognised by the Government of Mauritius and its
regulatory authorities, as we are actively participating in various
Joint Technical working groups, which sets the broad framework
for future policy development. We contribute the views of our
members to pre-budgetary and other government consultations,
through the work of our own Technical Committees which cover
Financial Services Strategy and Development, PR and Communication,
Learning and Capacity Building, Legal and Compliance
and Taxation.
We consider that our role is to offer constructive support to the
Mauritian Government, which has launched a number of new initiatives
to attract new market entrants and to grow the sector,
while presenting suggestions for change where needed. We are
working in close collaboration with the Financial Services Promotion
Agency (FSPA) and its new department the Financial Services
Institute, while maintaining regular dialogue with the Financial
Services Commission (FSC), Mauritius Revenue Authority (MRA)
and the key ministries, amongst others.
Networking opportunities
Beyond this, we seek to provide concrete benefits and real added
value to our members, through the provision of networking opportunities
to help them connect to each other and to enhance
their own networks, to increase their visibility through our website,
magazine and social media, and to keep them abreast of industry
news through our regular member’s communications such
as our Weekly News Tracker and monthly Newsletter.
In terms of reaching out to new markets, our programme of diplomatic
briefings, launched recently, will also give our members
real insights into the positions of the governments in some of
the markets they might be interested in, or where their clients
have interests, as a contribution to building their own business
intelligence.
As we maintain our outward-looking focus, we will strive to ensure
that we have the right set of products and the right infrastructure
in place to reaffirm the position of Mauritius on the
map. In 2017, we will broaden our focus to bring new operators
into Global Finance Mauritius in the spheres of Wealth Management,
Captive Insurance and Fintech, amongst others, which will
reinforce our ability to provide positive recommendations to the
Government on how these areas can be further developed to
grow the sector and expand its offer.
Overall, Global Finance Mauritius will maintain and enhance its
position as a key partner, both for its members and the Government,
in helping to realise the full potential of our competitive
financial industry, and acting as a thought leader in positioning
the Mauritius IFC as a clean, transparent and attractive jurisdiction
in the world.
“Our role is to offer
constructive support to the
Mauritian Government,
which has launched
a number of new
initiatives to attract new
market entrants and
to grow the sector.”
Mauritius International Financial Centre
7

COVER STORY
The Financial Services’
transformation
augurs well for a
promising future
Mauritius is set to speed up its shift towards a knowledge-based economy,
with financial services in the driving seat of the transformation.
The country is making every effort to
free itself from the mid-income trap
and is eyeing new sources of wealth
generation, as the government charts
out its blueprint to build new areas of intense
economic activities: the Ocean Economy, the
Maritime Hub and the Africa Agenda. These
new avenues of growth will have a considerable
bearing on existing and new sectors of the
economy.
The Financial services sector represents 12% of
the economy and is growing at a steady pace,
with an annual average growth rate of 5.5%
since 2013. The industry shows strength and
resilience amidst subdued activity in some
other sectors of the economy. The sector has
a promising future. Yet, it has to face multiple
challenges and contend with a number of game
changers, both locally and on the international
front. The renegotiation of the India – Mauritius
Double Taxation Avoidance Agreement (DTAA)
marks a turning point in the history of Global
Business in Mauritius. This development exposes
the Mauritius Financial Centre to a new wave
of competition.
International compliance requirements for more
transparency and accountability of cross-border
financial transactions, in addition, have a
significant bearing on the competitiveness of
the sector. Mauritius is a signatory to the OECD
exchange of tax-related information protocol as
well as to the USA’s Foreign Account Tax Compliance
Act (FATCA).
Innovation, the name of the game
Mauritius continues to take new steps to raise
its profile as a clean and transparent low tax jurisdiction.
The international community, on the
other hand, is stepping up efforts to crack down
on opaque finance and fraudulent practices to
evade tax in the wake of scandals like the Panama
Papers. There is a thirst across the globe for
greater transparency and governance in a world
where money moves from one place to another
within seconds. The industry requires new
capabilities and more substantive products to
flourish in this new environment. Innovation is
the name of the game. The industry will have to
innovate in terms of product development and
identification of new markets and niches to sustain
growth and attract new players.
Conducting international business in Mauritius
has plenty of benefits. The costs of our business
and professional services are still competitive,
and so, as is the quality of service which is provided
by a large pool of qualified professionals,
with many trained abroad. Mauritius has one of
the world’s highest numbers of accountants per
capita. The jurisdiction is highly-compliant with
rules on KYC, disclosure and exchange of information.
The industry is set to build on this strong
foundation and deliver a much more enriching
customer experience with higher value added
solutions.
The business model is readapting to the new
configuration. Mauritius is resolutely moving
8 December 2016

Mauritius International Financial Centre
9

COVER STORY THE FINANCIAL SERVICES’ TRANSFORMATION AUGURS WELL FOR A PROMISING FUTURE
“The presence of high-end
service providers can only raise
the image of Mauritius as a
financial centre of substance and
ward off potential unjustified
attacks on its reputation.”
from a treaty-based jurisdiction to one with
greater substance. Innovation allows service
providers to increase performance by adding
value to existing product offerings and designing
new products.
Global Finance Mauritius is working with policymakers
to facilitate the transfer of expertise,
skills and business development. The 2016-
2017 National Budget which was presented by
the Honourable Minister of Finance and Economic
Development, Mr Pravind Jugnauth, is introducing
a comprehensive package of business
and product development measures to infuse a
fresh impetus to the financial and business services
industry and assist in reaching out to new
markets.
The Government of Mauritius is providing tax
holidays to companies holding Treasury Management
Licence, Global Headquarters Administration
Licence, Assets and Fund Managers
managing an asset base of more than USD 100
million, as well as to ultra-high net worth individuals
investing a minimum of USD 25 million
in Mauritius, which has recently been enacted
through Regulations.
Improve governance and adapt to change
Moreover, regarding the banking sector, the Bank
of Mauritius Act and the Banking Act have been
reviewed to improve governance and to adapt
to change. Mauritius is also making inroads in
the alternative investments universe with the
forthcoming setting up of the new ‘Mauritius
International Derivatives & Commodities Exchange’
(MINDEX).
In order to create more synergy between the
Global Business industry and the Stock Exchange
of Mauritius (SEM), GBC 2 companies are
henceforth allowed to invest in listed securities,
10 December 2016

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COVER STORY THE FINANCIAL SERVICES’ TRANSFORMATION AUGURS WELL FOR A PROMISING FUTURE
A beautiful Africa story is unfolding
As Mauritius departs from a tax treaty-based business model, it is embracing
a multi-activity platform for servicing global investments. In the same
breath, the focus on Africa is all the more pertinent. The world is changing,
and Africa is the next frontier of growth. A beautiful Africa story is unfolding
and Mauritius, as the most open and competitive economy on the
continent, should be able to claim a big role in the narrative.
The rapid growing economies of the African continent are taking in huge
FDI to build infrastructure, industries, services and financial systems. The
Mauritius International Financial Centre has a role to play in channelling
international capital flows towards Africa and providing a host of financial
and business services for raising, structuring and deploying funds for projects
on the ground.
On the strength of its wide network of Investment Protection and Promotion
Agreements (IPPAs) with an increasing number of African countries,
sound and robust regulatory framework, and the fact that Mauritius continues
to top the ranks of key indicators such as the Mo Ibrahim Index of
African Governance, as well as leading Africa in the World Bank’s Ease of
Doing Business report, Mauritius is set to become a jurisdiction of choice
for connecting Africa with international sources of capital. Multinationals
operating will find the benefits of relocating their treasury and accounting
functions in Mauritius as they look for ways to manage risks relating to
fund repatriation in Africa.
Similarly, the International Financial Centre of Mauritius has all requirements
to provide and service structures like Family Offices that cater for
the investment needs of the growing number of high net-worth individuals
on the African continent.
Our pension, insurance and asset management industries can, on their
part, envisage new openings in Africa. The high number of expat workers
and professionals in Africa creates opportunities for devising private pension
plans.
Furthermore, leveraging its advanced banking and payments technology
infrastructure, Mauritius can provide third-party operating platforms for
banks and Fintech solutions across the continent, which still has very large
financially-underserved segments of population. There is indeed huge
scope for growth in Africa.
which will bring more animation in the capital
market. Moreover, this initiative will consolidate
the synergistic links between the Global Business
Sector and the SEM, ensure a better integration
of the activities conducted within the
financial services sector and also improve the
substance of activities conducted in the Global
Business Sector. In line with its ambition to Mauritius
a regional business hub, the Government
has decided to set up a full-fledged International
Arbitration Centre with the capacity and expertise
to resolve disputes.
All these measures are geared towards making
Mauritius a world-class financial services centre.
We need to make the transformational change
happen by encouraging international players
of repute to relocate part of their operations in
Mauritius and position the jurisdiction as a centre
that can cater for the wide-ranging and complex
needs of global investors and businesses.
The presence of high-end service providers can
only raise the image of Mauritius as a financial
centre of substance and ward off potential unjustified
attacks on its reputation.
Well-established centres like Singapore and
Hong-Kong that Mauritius wants to emulate
have become successful because they have
created an environment conducive to attracting
international players and exceptional talents
from overseas. Transfer of skills and expertise
should go hand-in-hand with building of local
capacity. The transformational change we are
about to see will open up new opportunities
for our young accountants, lawyers, finance
and banking graduates and practitioners,
company and trust administrators, etc. It is
therefore critical to anticipate and address the
demand for specialised human resources as
we are laying down the new architecture of
the business and financial services industry.
Professional development and exposure to
best practice are a matter of survival. Unless
we have a large pool of cutting-edge skills,
we will fall short of making Mauritius a worldclass
financial centre.
The newly set up Financial Services Institute
has a crucial role in developing high-end skills
for the various financial and business services.
It will help young graduates become employable,
whilst facilitating continuous upskilling
and learning for practising professionals in an
increasingly knowledge-intensive and highly
regulated industry.
The Mauritian International Financial Centre is at
a crossroads. We must swiftly adapt to change
and scale up the jurisdiction to new heights.
12 December 2016

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10/19/2016 3:30:42 PM
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INTERVIEW
HARVESH SEEGOLAM, CHIEF EXECUTIVE OF FINANCIAL SERVICES PROMOTION AGENCY:
“Potential investors and
players are excited about
our new offerings”
The Financial Services Promotion Agency (FSPA) has been reactivated with the
much focused mandate to promote and develop Mauritius as an International
Financial Centre (IFC) of excellence. Harvesh Seegolam, examines with us the
ways and means of strengthening the promotion of the financial services sector.
What would you say have been the main achievements of
the FSPA since it was set up in March 2016?
The FSPA, under the overall guidance of the Ministry of Financial
Services, Good Governance and Institutional Reforms, has
embarked on a four-limbs strategy: increase the visibility of the
Mauritius IFC through aggressive communication campaigns, and
ensure the sound repute of the jurisdiction; work on the development
of new offerings of the Mauritius IFC; consolidate our existing
markets and engage with new markets; and collaborate with other
jurisdictions and agencies.
Indeed, the very first milestone achieved has been the launch of
a new identity of the Mauritius International Financial Centre (IFC).
For too long, Mauritius has been portrayed as a fragmented financial
jurisdiction, with no recognizable international identity or logo.
The launch of this signature and brand identity therefore marked
the beginning of a new era of our IFC, one which embodies a new
suite of bespoke financial products, as well as the commitment of
the Government of Mauritius to open our Centre to multinational
corporations, global law firms, international insurance operators,
private banks, and high net worth individuals.
Secondly, we signed a Memorandum of Understanding with the
City of London to enable the Mauritius IFC and the London Financial
Centre to promote our financial services offerings on a common
platform. Through this MoU, a number of avenues have been
explored, and we have received firm interests from several UKbased
companies to set up presence in Mauritius. We have also
engaged with other agencies and institutions across our main markets,
and collaborative agreements are in the pipeline for next year.
Thirdly, in line with the vision of the Government and the strategy
laid down by our parent Ministry, we have worked with the regulators
and stakeholders to introduce a number of new segments for
graduating the Mauritius IFC towards greater sophistication, higher
value addition and competitive offering, such as Investment Bank-
ing, Global Legal Advisory Services, Global Headquarters Administration,
Global Treasury Activities, Overseas Family Offices, a new
scheme for Asset and Fund Managers, and the Mauritius International
Derivatives and Commodities Exchange.
We have also launched the Financial Services Institute (FSI) as the
capacity building arm of the FSPA to provide competency based
training, to bridge the gap between knowledge and real world applications
and financial literacy.
Finally, in line with our digital communications strategy, we have
developed the Mauritius IFC portal to showcase the latest developments
in our IFC, which also includes an ‘online directory’ which
provides for a list of the players operating in the Mauritius IFC and
a Newsroom which consists of a series of interviews with specific
questions addressed to core personalities and stakeholders within
the financial services industry in Mauritius.
You have undertaken a number of international missions
over the past months to promote the Mauritius IFC, and
in particular the new measures announced in the Budget.
What sort of feedback have you been receiving from
potential new market entrants?
Since January 2016, the FSPA has undertaken a number of promotional
missions to promote Mauritius as a globally recognised,
trusted and proven IFC of substance and repute, including participating
in a number of international conferences, bespoke events,
business forums and roundtables. The FSPA has also intervened in
expert discussions happening in other jurisdictions through video
conferencing and tele-conference.
Through these missions, the FSPA has attracted and facilitated the
establishment of a number of international financial operators,
law firms, funds and asset managers, captive managers, insurance
brokers and funds to set up and be domiciled in Mauritius. These
companies are either in the setting up phase, or are well estab-
14 December 2016

lished in Mauritius, and are now recruiting, which is generating
employment in sophisticated segments for our professionals and
young graduates. Moreover, a number of local and international
investors have already expressed interests in investing in the MIN-
DEX project.
Furthermore, all the prospective investors and players in the Mauritius
IFC are keenly looking, with content, to our new offerings;
and a number of high net worth individuals have already signified
their firm interests to set up their family offices in Mauritius once
the new licenses enter into force.
How do you see the position of the Mauritius IFC
developing over the coming years as a hub for Africa,
and how would you respond to possible critics of our
jurisdiction?
As the appetite for Africa is increasing at a very rapid pace, the
Mauritius IFC is well geared to play a strategic role in attracting and
channelling investment across Africa. With more than two decades’
track record in cross border investment and finance, the Mauritius
IFC offers an unparalleled well-regulated and transparent platform
for the international community. It is noteworthy that investments
through Mauritius to Africa annually exceed USD 19 billion.
The Mauritius IFC boasts an incredibly skilled pool of talent, modern
infrastructure and state-of-the-art technologies, ideal time–zone,
conducive fiscal environment, stable political and economic stability
as well as an enhanced market access with both air and sea connectivity.
In addition, Mauritius is the ideal platform for mitigating
risks and enhancing efficiency of cross-border investments.
With regard to the second part of the question, the FSPA systematically
scans local and international media for unfavourable reports
about our jurisdiction, and rebuts any unfounded and biased criticisms
made in a timely manner. For instance, as recently as last
week, the FSPA jointly released a statement with the FSC to rebut
certain allegations made about Mauritius being a tax haven by the
Oxfam International. In the statement, we stressed that Mauritius
cannot be a tax haven when the country has: 1) adopted all of the internationally
acclaimed standards in tax matters, 2) enabled quality
foreign investments in Africa leading to inclusive economic development,
3)always practiced a policy of transparency and exchange
of information, 4)always prone a model for its jurisdiction based on
substance, 5)adopted a friendly, homogenised and flat system of
taxation, and -) adopted a real multi sectoral economic model.
Managers, CEOs, CIOs, Investment Advisors, Legal Advisors, Private
Equity Experts, Brokers and Corporate Services Providers from
around the world.
Secondly, the FSPA has embarked on an Africa Strategy to position
the Mauritius IFC as the ideal matchmaking platform for investing
in the continent, notably by bringing together, under one
roof, potential investors and investees to initiate, discuss and close
significant deals. As such, the FSPA is working on a book of bankable
projects which consist of mid to high-value, as well as impactful,
projects across selected countries in Africa, which have been
shortlisted based on a country profiling screening.
During FINAF 2017, the FSPA will launch The Africa Platform, which
will match key projects in need of financing in selected countries
across the continent and determine how the Mauritius IFC can be
instrumental in connecting these projects with potential capital
providers. Thirdly, the FSPA will
continue to aggressively promote
the Mauritius IFC in the
international fora, and will
continue strengthening
our market base. Finally,
the FSPA will further develop
and expand our
product and services
offerings to ensure that
the Mauritius IFC remains
competitive.
What will be the main activities and initiatives of the
FSPA in 2017?
Firstly, the FSPA is organising the Finance Africa Conference
(FINAF 2017) in Mauritius on the 16th and 17th
March 2017. FINAF 2017 is the flagship conference of
the Mauritius IFC, and is expected to attract more than
300 delegates from across different sectors worldwide.
The two-day conference will focus on the various
mechanisms of financing projects in Africa and
will likely see the participation of Investment
Bankers, Sovereign Wealth Funds, Development
Finance Institutions (DFIs), Leading Fund
Mauritius International Financial Centre
15

ARBITRATION
Mauritius poised
for excellence
Mauritius has established itself as a leading International Financial
Centre and is well-positioned to establish itself as a centre of
excellence for international arbitration in the region.
In the last few years, Mauritius has taken
several important steps to establish itself
as a centre of excellence for international
arbitration in the region – it has overhauled
its legal and institutional frameworks and hosted
a series of conferences and seminars that are
aimed at providing a forum to discuss topical
issues in international arbitration.
In 2008, Mauritius enacted the Mauritian International
Arbitration Act in 2008 (amended in
2013) (the IAA), based on the UNCITRAL Model
Law 2006. A year later, it entered into a Host
Country Agreement with the Permanent Court
of Arbitration (PCA) in The Hague to open the
PCA Mauritius Office, which assists with the
discharge of the PCA Secretary General’s duties
under the IAA. In 2011, the Government of
Mauritius entered into a joint venture with the
LCIA in London to establish the LCIA-MIAC Arbitration
Centre – a neutral, independent arbitral
institution. In 2015, Mauritius hosted the signing
ceremony of the United Nations Convention
on Transparency in Treaty-based Investor-State
Arbitration, commonly known as the Mauritius
Convention on Transparency.
These important steps combined with the island’s
characteristics – inter alia a strong and
independent judiciary, a hybrid legal system
based on English and French law, a highly-educated
multi-lingual population, a stable democracy,
a commitment to good governance,
and a geographical location at the crossroads of
Africa and Asia – position Mauritius very well to
become a regional centre of excellence for international
arbitration.
The need for a long-term commitment
For any jurisdiction to establish itself as a
preeminent centre of international arbitration
it requires a long-term process that requires a
long-term commitment and the confidence of
parties who use international arbitration. Mauritius
has demonstrated that it is committed to
the process and what remains is to ask whether
it can gain the confidence of parties.
A 2015 survey by the Queen Mary University of
London (QMUL)1 revealed that the main factors
influencing a party’s choice of seat are the seat’s
established formal legal infrastructure, the neutrality
and impartiality of the legal system, the
national arbitration law, and its track record for
enforcing agreements to arbitrate and arbitral
awards2. Mauritius has a well-established formal
legal infrastructure, is considered a neutral
and impartial jurisdiction (reminiscent of Singapore
and Geneva), has a modern arbitration law
and is developing a track record of enforcing arbitral
agreements and arbitral awards3. In other
words, Mauritius has the characteristics that are
necessary to gain the confidence of users of international
arbitration.
A cross sectoral approach
As Mauritius continues to develop its important
financial services sector, and deepen its
economic relationship with mainland Africa, it
is vital that it also promotes its capacity in international
arbitration. If we look at Singapore
and Hong Kong as examples of recent entrants
to the international arbitration market, we note
that both jurisdictions continue to promote international
arbitration in tandem with other sectors
in their economies. In Mauritius, this coordinated
approach can be found in the Financial
Services Commission’s revised substance requirements
for GBC1 companies – after the revision,
companies that include a clause specifying
that all disputes arising out of the constitution
of the company shall be resolved by arbitration
in Mauritius are deemed to have met one of the
substance requirements.
The use of arbitration could be promoted
By Ndanga Kamau,
Registrar of the LCIA-MIAC
Arbitration Centre
16 December 2016

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ARBITRATION MAURITIUS POISED FOR EXCELLENCE
18 December 2016

throughout the financial services sector, and
other sectors such as construction, infrastructure
development and agriculture. Mauritius has
taken great steps to develop its infrastructure
for international arbitration, and investors and
local users would be benefitting from worldclass
legislation and the use of a world-class
institution at a fraction of the cost.
Shared knowledge
Mauritius has demonstrated that it is at the
forefront of the development of international
arbitration in the region through hosting seminars
and conferences. In 2014, Mauritius hosted
its third bi-annual Congress on challenges
to awards and enforcement of awards in Africa
– the next conference will be held in 2018.
However, without a doubt, the coming-of-age
moment for Mauritius was the hosting of the
23 rd ICCA Congress from 8-11 May 2016.
The International Council for Commercial Arbitration
(ICCA) Congress is the largest regular
conference on international arbitration, and
brings together practitioners, academics, judges
and other government officials from all over the
world to discuss academic and practical issues
around a specific theme. This year’s theme was
“International Arbitration and the Rule of Law:
Contribution and Conformity”, which had great
resonance in the African region where respect
for the rule of law is often challenged.
The 2016 Congress marked the first time that
the Congress had been held in Africa and attracted
850 delegates from more than 40 countries.
More than a third of the delegates were African
– the largest representation of African delegates
at an ICCA Congress. Speakers were drawn from
a wide range of backgrounds and the UN Secretary-General
Ban Ki-moon, Prime Minister of
the Republic of Mauritius, Sir Anerood Jugnauth
QC, The Honourable Attorney-General, Mr Ravi
Yerrigadoo, the Minister for Financial Services,
Good Governance and Institutional Reforms, Mr
Roshi Bhadain and former United Kingdom Lord
of Appeal in Ordinary, Lord Hoffmann.
The ICCA Congress is awarded after a competitive
process and goes to the jurisdiction that
demonstrates that it can contribute to the development
of international arbitration in its region.
Mauritius was chosen partly in recognition
of the steps that it has already taken to develop
international arbitration, and its potential to
contribute to the development of international
arbitration in Africa.
“As Mauritius continues to develop
its important financial services
sector, and deepen its economic
relationship with Africa, it is vital
that it also promotes its capacity in
international arbitration. If we look
at Singapore and Hong Kong as
examples of recent entrants to the
international arbitration market,
we note that both jurisdictions
continue to promote international
arbitration in tandem with other
sectors in their economies.”
Closing remarks
International arbitration is proven to be an efficient
and effective mechanism for the resolution
of commercial disputes and Mauritius has
taken great strides to ensure that it provides
world-class services in the African region. The
role of institutions such as the LCIA-MIAC Arbitration
Centre – voted Best Up-and-Coming
Regional Institutional in 2015 by the Global Arbitration
Review - in achieving and maintaining
excellence in international arbitration is critical.
The efficient administration of arbitrations and
mediations by LCIA-MIAC, complemented by
the pro-arbitration stance of the judiciary, will
serve to bolster confidence in the jurisdiction.
In addition to the work that has already been
done, Mauritius plans to set up a state-of-the-art
hearing facility in 2017. It is expected that the
facility would attract more hearings to Mauritius
and enhance the island’s profile in the region.
The hearing centre will rely on the well-established
hospitality industry for accommodation,
transport and dining for parties who come to
Mauritius for hearings - further reinforcing the
need for cross-sectoral collaboration.
1
2015 International Arbitration Survey:
Improvements and Innovations in International
Arbitration, www.arbitration.
qmul.ac.uk/research/2015/
2
2015 International Arbitration Survey:
Improvements and Innovations in International
Arbitration, www.arbitration.
qmul.ac.uk/research/2015/, p.2
3
See for example the publication “Why
Mauritius?” published by BLC Robert &
Associates, which provides an overview
of Supreme Court decisions related to
the Mauritian International Arbitration
Act 2008. Copies available on request
from the LCIA-MIAC Secretariat, info@
lcia-miac.org
Mauritius International Financial Centre
19

PRODUCT DEVELOPMENT
Insurance Captives:
An important new
business growth
opportunity for Mauritius
When a company sets up their own insurance company (an insurance
captive) they take control over their risk management needs and
insurance costs. For Mauritians, it means the establishment of a
new professional business sector, job creation and new skills.
20 December 2016

In December of 2015, the government of
Mauritius passed enabling legislation for
both Mauritian and offshore companies
to establish “Pure Insurance Captives”.
Although this is a very recent initiative in Mauritius,
insurance captives are used by an estimated
8,000 companies throughout the world.
Long established locations for companies to set
up and operate captives, called domiciles, have
been operating in places such as Bermuda and
Barbados for more than 30 years and have become
an important and essential business sector
on those islands. In addition to being a very
valuable risk management and insurance strategy
for companies which have captives, this business
sector has been leveraged by those domiciles
to create excellent new professional jobs on
island which support insurance captive operations.
As captives are established, it is anticipated
that jobs will be created for professional support
including captive management, accounting, actuarial,
corporate services providers, investment
management and many others.
“Mauritius has
adopted captive
legislation which
is very competitive
with the other
captive domiciles
around the world.”
Mauritius has adopted captive legislation which
is very competitive with the other captive domiciles
around the world. This is necessary to
attract corporates to consider Mauritius as the
location to establish their new insurance captives
or to move an existing insurance captive
to Mauritius. It is expected that corporates doing
business and having risks in Africa, India and
other locations in this hemisphere will find Mauritius
an attractive location to setup and operate
insurance captives. Mauritius already had an
extensive network of corporate service providers
and supporting professionals which are an
important consideration for companies considering
locations to establish their captives.
What are insurance captives? This leading edge
initiative provides an opportunity for corporations
to establish and operate their own insurance
subsidiaries to insure traditional property
and casualty exposures. In most cases, captives
only insure their own corporate risks, replacing
expensive commercial market insurance protection
with self-insurance. Captives are also
commonly used to provide coverage for hard
to insure risks or for risks where commercial
coverage is unavailable or too restrictive to
meet the risk management requirements of
the corporate.
Insurance captives are also used extensively
by smaller companies or groups with similar
risk profiles and which want to share insurance
exposures by efficiently pooling their risks into
arrangements that allow them more leverage in
the commercial insurance market.
Companies and groups which are good candidates
to form captives have the following characteristics:
• Their “cost of risk” ( premiums plus uninsured
losses) is USD 1,000,000 or more;
They carry or want to carry significant
retentions ; they may want to offer lower
retentions to specific business units
• They have international operations
• They have a good spread of risk
• They have long term plans to eliminate
or reduce insurance costs
• They enjoy long term support from management
including accounting, tax and finance
• They see significant emerging or
new risks in their strategic plan
• They have a risk management strategy
to manage and finance risk
• They want broader/better coverage than
the insurance market is prepared to offer;
they want a hedge against swings in the
insurance market pricing or coverage
• They want better access to reinsurance
• They have a good insurance claims experience
and a commitment to safety
and claims management
• They want to take more control
over insurance claims
• They have uninsured risks that could be handled
by an insurance contract (e.g. political risk)
• They want to capture quality underwriting
and loss data
• They carry third party risks (e.g.
warranties; JV partners)
By Mark Roberton,
Senior Advisor with Palm
Captive Management
(Mauritius) Ltd.
Mauritius International Financial Centre
21

PRODUCT DEVELOPMENT
Can Mauritius become
the FinTech hub of Africa?
FinTech is probably one of the most over-hyped terms currently
used in the financial arena. Can Mauritius become the FinTech hub
of Africa? The question was put to Mark O’Sullivan recently, when
discussing cross border payments from Europe into Africa.
By Mark O’Sullivan,
founder and CEO of
Interpaytech.
On a recent trip to London, a contact
of mine complained that he had
struggled for a year to raise capital
for his new venture, but that after
rewriting his business plan and relaunching
his venture as a FinTech solution he was able
to close his series A fundraising in a matter of
weeks. If this story is a real life example, there
is no doubt that the Fintech train is leaving the
station and everyone wants to be a part of it. To
provide an idea of the size of the Global FinTech
scene, UK Trade and Investment (UKTI) has estimated
that the FinTech industry generates in
revenue over £20 billion annually just in London,which
is more than in any other city.
If we look at the area of payments, over the past
five years the FinTech payment industry has
exploded in Europe and the US. We have seen
both consumers and corporate clients seeking
cheaper and faster alternatives to their traditional
banking channels, while regulators have
continued to put pressure on banks to open
their payment networks to allow increased competition,
allowing FinTech payment companies
to quickly establish themselves. While they have
not been perceived as a threat to banks in terms
of market share, the speed at which FinTech can
move and adapt has seen some Fintech companies
raise large amounts of investment capital.
To provide an indication of the current speed
of events in the European space, Fidor Bank,
a German online bank that only launched in
2012, was acquired last month by Groupe BPCE,
France’s second largest banking group. BPCE
would hardly see Fidor as a direct threat to its
banking business, but European banks are now
waking up to is the realization that the FinTech
client experience, and the speed of delivery of
new products, is something they just cannot
compete with. Anyone who has worked in banking
knows the ‘death by committee’ syndrome,
and the process of bringing a new product to
market can take months, if not years, of planning.
It is, therefore, far easier to import this
technology into their environment by purchasing
established Fintech companies.
Vital component in place
So when we return to the original question of
“Can Mauritius become the FinTech hub of Africa?”
I would say, without a doubt, that it can.
While FinTech is in its infancy in Mauritius, all
the vital components are already in place to
make it happen. South Africa is already established
with a multitude of companies offering
Fintech solutions ranging from payments to P2P
lending to Robot investment advisors, Kenya is
not too far behind and Rwanda is also keen to
be seen as a Fintech hub.
So how can Mauritius position itself to attract
not only FinTech companies, but also the necessary
infrastructure and increase in employment
and tax revenue that comes with this? Having
worked in the financial services industry in Mauritius
for the past five years, it seems that every
time Singapore is mentioned it is normally followed
by all the advantages it has over Mauritius
as a jurisdiction, many of which are just false or
misleading. When it comes to FinTech, for once,
there is however a great deal to be learned from
Singapore, which has risen from nowhere to become
the Fintech hub of Asia in just five years.
So how did it happen? The Singaporean government
and the MAS (Monetary Authority of Singapore)
took the bold decision that Singapore
had to be the FinTech hub of Asia. They invested
heavily, to the tune of around $ 225 million,
22 December 2016

“The absence of capital controls is key as funds can
flow freely in any financial product, since FinTech is
about freedom of movement. FinTech does not have
to mean a lack of regulation, but the fact that the
Mauritian Budget 2016-2017 introduces a ‘regulatory
sandbox licence’ is clearly helpful and timely.”
and backed it up with constant support from the
MAS in ensuring that enabling regulation flowed
and banks had to open up and become more
competitive. Wind forward to today and this has
worked, the Asian FinTech scene is booming and
now Hong Kong is rapidly trying to copy and emulate
its success. So how does this all relate to
Mauritius and its potential as the African FinTech
hub?
The ‘sandbox’ idea
When Singapore first took the decision to become
the FinTech hub of Asia, they realized from
the outset that they could never compete with
the likes of Silicon Valley. What they could do,
however, was to create, from a regulatory and
investment point of view, the ideal environment
for FinTech companies to operate and flourish
from within Asia and this is exactly what has
happened and will continue to happen. As a
regulator, the MAS was committed to welcoming
new entrants and was the first regulator to
adopt the ‘sandbox’ idea, where new entrants
with new concepts could operate with little regulation
and test and grow their companies until
of a size that required regulation.
Mauritius, compared with the other current African
Fintech jurisdictions, has some significant
advantages. The absence of capital controls
is key as funds can flow freely in any financial
product, since FinTech is about freedom of
movement. FinTech does not have to mean a
lack of regulation, but the fact that the Mauritian
Budget 2016-2017 introduces a ‘regulatory
sandbox licence’ is clearly helpful and timely. As
a well-established jurisdiction for investments,
the Mauritius IFC benefits from having established
funds on its doorstep looking for investment
opportunities and these could easily be
directed to support a local FinTech sector. The
highly educated workforce also found locally is
also crucial and, once exposed to new ideas and
products and employed by FinTech companies,
would over time absorb these and set up their
own FinTech startups.
Another critical aspect of FinTech is the desire to
always look to improve and share ideas and support
each other in the FinTech community. You
do not have to be the next Applepay but you
can still provide a unique customer offering. This
openness allows ideas to be exchanged. FinTech
does not operate on a country-specific basis so
a product or solution developed in Mauritius
could be incorporated by a fellow Fintech company
in Hong Kong or the US. Regulation is key.
Not every FinTech company will require it, as
some may not be solution providers, but rather
supplying technology to the solution provider
to improve their final offering. However, to build
a true Fintech hub the regulator has to create
the environment to allow it all to happen. Mauritius
has some great coders and programmers
but, with the greatest will in the world, many do
not find opportunities within the current employment
arena and leave to find opportunities
overseas. If Mauritius could truly establish itself
as an emerging FinTech hub this brain drain of
young talent could be reversed. It is estimated
that Singapore has created in excess of 25,000
jobs in the past five years either directly of as a
result of Fintech. So the proof is there. Fintech is
happening and the chance for Mauritius to become
the FinTech hub of Africa is within grasp, if
only the right enabling environment can be put
in place.
Mauritius International Financial Centre
23

PRODUCT DEVELOPMENT
The Financial Services
Promotion Agency:
Spearheading the
development of
the Mauritius IFC
The Financial Services Promotion Agency (FSPA) has been reactivated in 2015, and
is well-embarked in driving the vision of the Government of Mauritius to graduate
the Mauritius International Financial Centre (IFC) to a new level of sophistication.
By Harvesh Seegolam,
Chief Executive of FSPA
Under the over-arching guidance of the
Ministry of Financial Services, Good
Governance and Institutional Reforms
(FSGGIR), the FSPA is developing a
new dimension of the Mauritius IFC, one which
is synonymous with aggressive promotional and
visibility campaigns, sophisticated and high value-addition
product offerings, high-end professional
jobs, and a diversified market base.
Since January 2016, the FSPA has embarked
on key initiatives to showcase the Mauritius
IFC, and ensure constant visibility, across major
markets, including through the organization of
business forums, focused sessions and participation
and sponsoring acclaimed international
conferences.
The FSPA equally engaged, on a technical level,
with regulators, operators, industry experts and
international investors to develop new segments
of activities for the Mauritius IFC. Such
new segments cater for the rapidly-evolving
markets and international standards, and the
needs of the international investing community,
and have been announced in the recent Government
Budget. The FSPA is focussing on the
development of key segments of activities in
Mauritius, including, interalia:
Wealth and Asset management
Through the introduction of the Overseas Family
Offices (OFOs) license, international High Net
Worth families are being targeted and encouraged
to manage their wealth from Mauritius by
setting up their family offices in the Mauritius IFC.
The new family office regime, which provides for
a 5-year tax holiday, equally allows the Mauritius
IFC to tap into the growing regional and global
movement of wealth and capital in search of a
proven, reliable and stable and secure wealth
management centre. The OFO Licence will cater
for both single family offices and multifamily
offices.
The new Scheme, which comes with a tax incentive
for 5 years, will further incentivize mid
to big size fund and asset managers to establish
their management offices in Mauritius, and
create opportunities for regional portfolios to
be managed from the Mauritius IFC. The FSPA
is already in discussion with key asset and fund
managers in this respect.
The Fund and Asset managers will be issued with
either an Asset Manager Certificate, a Fund Manager
Certificate or an Asset and Fund Manager
Certificate by the Financial Services Commission
24 December 2016

(FSC). Such professionals would have to manage
an asset base in excess of USD 100 million.
Headquartering and treasury
management
The Global Headquarters Administration Licence
and the Global Treasury Activities Licence
aim at enhancing Mauritius’ position as a regional
financial and business hub. The new licenses
will enable multinational corporations to set up
their regional administration, procurement and
accounting offices, as well as conduct treasury
management activities in the Mauritius IFC.
Companies operating under the Global Headquarter
Scheme will benefit from an 8-year tax
holiday while, Global Treasury companies will
be eligible for a 5-year tax holiday. The tax holidays
will be subject to conditions of employment
and substance.
Investment banking
The new Investment Banking License allows
reputed and boutique investment banks to establish
in Mauritius and act as high-end professional
intermediaries which facilitate mergers
and acquisitions, listings, IPOs, cross-border investment
structuring and also provide financial
advisory services.
The Investment Banking Licence, which will
henceforth be issued by the FSC, is an umbrella
licence encompassing the activities of an investment
dealer, investment adviser, investment adviser
in corporate finance, credit finance, asset
management and non-custodian. The minimum
stated unimpaired capital for the issuance of
this licence has been set at MUR 50 million. A
5-year tax holiday incentive will also be provided
to the licensed Investment Banks.
The Mindex platform
The Mauritius International Derivatives and
Commodities Exchange (MINDEX) platform will
revolutionize the trading of financial derivatives,
and precious metals and stones, in this part of
the region. The MINDEX platform will also house
a clearing centre and a state-of-the-art vault.
The Ministry of FSGGIR, through the FSPA, is coordinating
the implementation of the MINDEX
project.
Intellectual property hub
“Since January 2016, the FSPA
has embarked on key initiatives
to showcase the Mauritius IFC,
and ensure constant visibility,
across major markets.”
Mauritius will adhere to a number of the World
Intellectual Property Organisation (WIPO) Administered
Treaties, namely, Patent Corporation
Treaty (PCT), The Hague Convention and the Madrid
Protocol to facilitate the registration of Patents,
Trademarks and Industrial Designs.
The signing and ratification of the treaties will
transform Mauritius into an international hub
for intellectual properties. The international
business community would be able to file one
application in Mauritius to simultaneously protect
its invention in 148 countries throughout
the world.
Global legal advisory services
Flagship international law firms are now able to
set up their regional offices and operations in
Mauritius to provide legal advisory services on
complex corporate and financial transactions,
as well as arbitration and mediation services.
Limited Liability Partnership structures, being
the preferred structure for services firms like
law firms, has also been introduced in Mauritius.
These law firms will be provided with a 5-year
tax holiday.
Mauritius International Financial Centre
25

VALUE ADDED SERVICES
How can Mauritius
help bridge gaps in
financial services
offering for Africa
As growth remains sturdy in Africa as a whole, the continent continues
to face gaps in terms of financial services offering which could represent
a timely opportunity for operators present in the Mauritius financial
services sector to build a significant presence on the continent.
By Mahen Govinda,
Partner at ABAX
In this article, we focus on a few priority areas
where such gaps are most flagrant, having
the biggest impact on growth, on the
continent. We shall hence be taking a micro
perspective on the question posed in our title,
whilst bearing in mind the macro perspective of
the Mauritius IFC in terms of it being a premier
ecosystem geared to Africa’s growth.
In our view, the most pressing needs of Africa
as characterised by existing gaps between demand
for and supply of financial services are felt
in the areas of: trade financing; growth financing;
asset financing; cash and treasury management;
wealth management.
Trade financing
The African Development Bank published a
report in 2014 titled “Trade Finance in Africa”
whereby the trade activities of 276 African
commercial banks operating in 45 African countries
were surveyed. It found that the market for
bank-intermediated trade finance was between
US$ 330-350 billion, and the value of unmet
demand for trade finance in Africa was conservatively
estimated at US$112 billion in 2012. The
major reasons highlighted in that same report
for rejecting financing requests were a lack of
credit worthiness or credit history, insufficient
limits granted by endorsing banks to local African
issuing banks, small balance sheets and lim-
ited capital of African banks, and insufficient US
dollar liquidity as summarised in Figure 1.
Trade financing needs in Africa could be tackled
through the creation of an investment fund
typically structured as a private equity fund or
venture capital fund (higher return for higher
risk level) promoted jointly by DFI’s, participating
commercial banks - both the specialised
and the traditional ones - and other investors
to provide trade finance to export companies in
Africa. The Mauritius jurisdiction as a safe, trusted
and effective platform for structuring such
funds coupled with the financial robustness and
expertise in trade financing of Mauritius’ large
commercial banks should be seen as an opportunity
for our financial services sector to provide
a much needed response to alleviate the acute
short-term financing deficit African exporters
are faced with. As a solution, such an initiative
could also go a long way to promoting intra-African
trade, currently at a very low level compared
to Africa’s trading with its long-established partners
like China, India, Japan and South Korea. In
the area of trade financing, Mauritius commercial
banks have a breath of expertise that could
be leveraged, thus justifying their participation
in such trade finance oriented investment funds
and bringing in the comfort factor in terms of
proven skills, business processes and trade collaterals.
26 December 2016

VALUE ADDED SERVICES HOW CAN MAURITIUS HELP BRIDGE GAPS IN FINANCIAL SERVICES OFFERING FOR AFRICA
“Our financial services sector could provide a much
needed response to alleviate the acute short-term
financing deficit African exporters are faced with.”
As an illustration, one of our clients established
as a GBC1 in Mauritius for more than 15 years
with and operational office employing some 20
staff is currently running a procurement, cash
and treasury centre in Mauritius involved in
trade financing with local banks for the group.
The company extensively uses the trade financing
facilities obtained from three banks in Mauritius
to do its activities in USD, GBP and Euro.
The eco-system available in Mauritius has allowed
the company to consolidate a strong balance
sheet whilst being financially autonomous
from the group.
4% 9%
9%
9%
15%
15%
39%
Client Credit worthiness
Capital constraint
Balance sheet capacity constraint
Insufficient limits from confirming banks
Limited foreign currency liquidity
Product or instrument limits
Other
Growth financing
For Africa’s more mature exporting companies
this time, the Mauritius Stock Exchange (MSE)
could be used to raise equity or quasi-equity
through IPO’s and listing of such debt instruments
as corporate bonds in hard currencies
to mitigate currency risk. Through the Mauritius
Stock Exchange, such companies are thus
able to internationalise their growth financing
requirements whilst availing themselves of the
comfort and security of a mature stock exchange
increasingly geared towards Africa.
Asset financing
In the area of asset financing, Mauritius leasing
companies have built proven expertise that can
now be leveraged over the continent where traditionally
leasing has been quasi-inexistent. The
nature of the leasing business requiring physical
presence in places where the assets are owned
points to the possibility for Mauritius-based
leasing companies to team up in joint ventures
with African counterparts to exploit what we
reckon is a vast market for asset financing in Africa
nowadays.
Cash and treasury management
Likewise, more and more companies doing
business with Africa - especially those with multi-country
operations - are resorting to Mauritius
Reasons for African banks’ rejection of letters of credit applications (AfDB, 2014)
as a well-positioned and effective platform for
cash and treasury management on the back of
our sound ecosystem, ease-of-doing business,
absence of foreign exchange control and capacity
to deal in multiple currencies including in
African currencies. The element of currency risk
and ease-of-doing business is further complemented
by these Africa-focused trading companies
being also able to find locally the right competencies
to run such cash and treasury centres.
Wealth management
If the opportunity areas identified above relate
to the corporate world, one should not lose sight
of the growing potential in Africa for retail banking
and wealth management services as a higher
proportion of the African working population
climbs up the revenue ladder. Diverse statistical
sources show that Africa has one of the world’s
fastest growing ‘HNWI’ population, at least in
absolute terms. This, coupled with the need for
succession planning for large African corporations
that are mainly family-held businesses,
represents yet untapped opportunities in terms
of wealth management. Our existing legislation
in terms of Mauritius-domiciled trusts and
the announcement in the latest Budget speech
regarding the setting up of family offices are
pointing to the way forward.
28 December 2016

INSURANCE
Why does Africa
need corporate and
specialty insurance
Africa is a vast and diverse continent which offers potential
investors a vast array of opportunities, but also presents significant
risks which need to be managed and mitigated.
Mauritius has been very much alive
to this challenge, and has been at
the forefront of building a network
of Investment Promotion and Protection
Agreements (IPPAs), now signed with 24
African countries, in order to guarantee Mauritian
investment in the face of expropriation and
social unrest, for example. When it comes to
insuring the daily risks of developing and growing
a business in Africa, however, corporate and
specialty insurance comes into play.
Corporate and specialty lines of insurance are
a segment of the insurance industry where unusual
and difficult-to-assess risks can be challenging
to place in traditional markets. Specialty
insurance solves this predicament by providing
bespoke, tailor-made solutions for insurance
coverage, as opposed to an all-in coverage
which may not be necessary for the client. For
example, for property risks, the standard traditional
cover is all risk cover, however a specialty
insurance policy could provide separate coverage
for catastrophe only, stop loss, nominated
perils and deductible buy back, which could be
better suited for the client’s needs. AXA views
Africa as having excellent growth potential, and
is thus providing this kind of specialist risk cover
for risks through AXA Africa Specialty Risks
which traditional local African insurers would
not normally underwrite.
Growth in Africa was initially facilitated by under-utilised
infrastructure capacity. However, a
few years ago this was fully utilized and needed
both upgrading and expansion. Foreign investors,
governments and development funds have
all focused on providing the necessary funding
for infrastructure and industrial development.
Governments across Africa have been willing
to sign up long term agreements to ensure that
investors can make an adequate return on their
investment.
The key points here are that the majority of investment
is coming from outside Africa, African
countries tend to be hampered by poor credit
ratings, reflecting their developing status and
there is potential for political and financial uncertainty.
Moreover, the local insurance industries
have largely focused on personal lines and
SME insurance, with South Africa being the notable
exception.
In the light of this background, the underwriting
skill set in African countries does not yet exist
to understand and price large and/or complex
risks and in general, the insurers do not have
a balance sheet that could provide the claims
payment capability in response to a claim on
this scale. Furthermore, most foreign investors
are looking for insurance coverage from scale
providers with a minimum of an international ‘A’
grade rating.
At AXA Africa Specialty Risks we have chosen
Mauritius, as we consider that it is emerging as a
significant International Financial Centre, with a
commitment to fostering growth and with rapidly
developing skills and expertise, with an educated
population which is equally fluent in English
and French. It is therefore very well placed
to serve African markets. This is why we have set
up a Coverholder in Mauritius as a subsidiary
which will both process and issue our policies,
with the business to be generated by our marketing
hubs, across Africa, along with AXA’s other
African businesses and collaboration with local
partners.
By Mikir Shah,
CEO, AXA Africa Specialty Risks
Mauritius International Financial Centre
31

INSURANCE WHY DOES AFRICA NEED CORPORATE AND SPECIALTY INSURANCE
“Corporate and specialty lines of insurance are
a segment of the insurance industry where
unusual and difficult-to-assess risks can be
challenging to place in traditional markets.”
Types of risk mitigation
First of all, there is a major role for specialty risk
insurance in relation to construction and engineering
projects. To provide some examples,
there can be a surety to cover against contractors
defaulting during the construction phase; Construction
All Risks insurance to cover the risks
associated with a large project; delayed start up
cover to make up for some of the financial loss
when a project is delayed by unforeseen events;
and operational covers to fund getting a business
back to operational mode after a claim event and
even to offset the profitability impact.
Second, energy is a major challenge for Africa,
with many governments struggling to meet demand,
and ambitious renewable energy targets
being introduced in a number of countries, for
example with Namibia looking at a ‘70% renewables
by 2030’ scenario. Innovative insurance
products can be offered to the energy industry,
beyond providing physical damage and business
interruption coverage for operating risks,
such as construction coverage for renewable
energy projects including wind farms (offshore
and onshore), solar photovoltaic plants, bio fuel
plants, geothermal plants and hydro generation
projects.
Third, the impact of political risk on businesses
in Africa should not be underestimated, and
here too corporate and speciality risk can have
an important role to play. Political risk insurance
can cover cases where it is not possible to repatriate
loan payments or dividends, or where
a government contract is not honoured. Asset
risks insurance can protect fixed assets, such
as factories, mines and other industrial investments,
against expropriation and licence cancellation,
or mobile assets against confiscation
and wilful destruction. There is even political violence
and terrorism insurance providing global
war, terrorism and political violence cover, war
and strikes cover for transit risk, and third party
terrorism liability amongst others.
High level of demand
Since we started our venture earlier this year,
we have been surprised by the high level of demand,
which has outstripped our initial forecast
and expectations. It has been particularly interesting
to note that we are being asked to provide
insurance covers for the full range of corporate
and specialty risks with energy and political risk
cover high on clients’ agendas. We have seen
risks from Francophone countries where AXA already
has local insurance companies as well as
Lusophone countries where we do not currently
have a local presence.
Overall, the growth potential of Africa will not
be realised overnight, but the provision of corporate
and specialty risks insurance will be a
crucial factor in providing the investors with the
comfort and coverage they need to get off the
ground. Mauritius can play a key role in supporting
this endeavor by acting as an insurance hub,
as part of its broader offer to the world as a safe
and secure platform for investment in the African
continent.
32 December 2016

REGIONAL TRADE
The Belt and Road
Initiative: elevating
trade in the region
The idea of the ‘Silk Road Economic Belt’ (‘the Belt’) was first announced by
President Xi Jinping in September 2013. The following month, President Xi proposed
to build the ‘21st Century Maritime Silk Road’ (‘the Road’) and to establish the
Asian Infrastructure Investment Bank which attracted worldwide attention.
By Dean Lam Kin Teng,
Managing Director HSBC
The Belt and Road Initiative covers more
than 60 countries and jurisdictions
across Asia, Europe and Africa, which
include a total population of 4.4 billion (representing
around 63% of the world’s population)
and accounts for around 30% of the world’s
total economic output. The integrated initiative
will promote infrastructure development in the
regions involved, establish new trade routes and
create new business opportunities. The annual
trade volume between China and the countries
along these routes is expected to exceed
USD2.5 trillion in the next 10 years. The initiative
also closely aligns with the “Going Out”
strategy of Chinese enterprises.
To implement the Belt and Road Initiative, China
has spearheaded the establishment of two
financial institutions, the Silk Road Fund and the
Asian Infrastructure Investment Bank, to fulfil its
imminent capital needs. The Silk Road Fund has
a total capital of USD40 billion to facilitate investment
in infrastructure and resources, while
the Asian Infrastructure Investment Bank led by
China and co-founded by more than 50 countries
and jurisdictions is investing USD100 billion
in the project.
Five Areas of Connectivity
The Belt and Road Initiative aims to promote
connectivity in five areas: policy co-ordination,
facilities connectivity, unimpeded trade, financial
integration and people-to-people bonds.
The initiative has the mission of facilitating connectivity
in infrastructure, resources development,
industrial co-operation and financial integration
across countries along the Belt and Road.
The goal is to deepen the collaboration between
countries and support economic growth in the
region.
As outlined in the Belt and Road Initiative, the
Belt consists of three major paths: (1) bringing
together China, Central Asia, Russia and Europe
(particularly the Baltic States); (2) linking China
with the Persian Gulf and the Mediterranean Sea
through Central Asia and West Asia and (3) connecting
China with Southeast Asia, South Asia
and the Indian Ocean. Meanwhile, the Road focuses
on connecting China’s seaports to Europe
through the South China Sea and the Indian
Ocean, and linking China’s coastal cities through
the South China Sea to the South Pacific.
In 2015, China has directly invested a total
sum of USD14.82 billion in 49 countries along
the Belt and Road, representing an increase of
18.2% over the previous year. The largest share
of this investment went to Singapore, Kazakhstan,
Laos, Indonesia, Russia and Thailand.
The role of Mauritius
As a reputable and trusted regional financial
centre, which Mauritius is aiming to be, the
country can very much aspire to assume the
role of the regional trading hub but also that of
a global shipping and logistics centre. The coun-
34 December 2016

“Mauritius can very much
aspire to assume the role of
the regional trading hub but
also that of a global shipping
and logistics center.”
MAURITIUS
Mauritius International Financial Centre
35

REGIONAL TRADE THE BELT AND ROAD INITIATIVE: ELEVATING TRADE IN THE REGION
try’s both regional and international experience
and wide-ranging professional expertise, together
with a strong management culture could
contribute to the Belt and Road Initiative in different
areas.
The infrastructure development projects of
the Belt and Road Initiative require substantial
investment. On top of the ‘two banks and
one fund’ (the Asian Infrastructure Investment
Bank, BRICS New Development Bank and the
Silk Road Fund), the Belt and Road projects also
need additional sources of funding to support
the full range of projects. With a well-developed
legal system, low tax rates, diversified financing
channels and a mature capital market, Mauritius
is well placed in the region to provide end-to
end financing support to the Belt and Road Initiative
into Africa.
Mauritius and China have excellent bilateral ties,
and trade exchanges between our two countries
are on the rise. With a well-established network
stretching across China and around the region,
driven by seasoned industry professionals,
Mauritius could become a prominent ‘one-stop’
service provider along the new trade route into
Africa.
Distinguished transportation and
logistics hub
As a developing regional shipping and logistics
hub, Mauritius can position itself at the heart
of a global network. Not only does the country
offer traditional shipping services, but it also
provides airfreight services to and from at least
30 countries along the Belt and Road. As the
Belt and Road Initiative is implemented, Mauritius
could strengthen its position as a gateway
for Chinese enterprises going out to Africa.
Mauritius should develop its platform to facilitate
trade and further distinguish itself as
an important transportation and logistics and
petroleum hub.
As economic activities between China and
countries along the Belt and Road become
more frequent, RMB usage will gradually increase.
Hong Kong is currently the world’s largest
offshore RMB centre, and is therefore ready
to meet the demand for RMB settlement, financing
and capital management for projects
under the Belt and Road Initiative. At the same
time, this will give a boost to RMB business in
Mauritius, RMB investment products. Through
major capital-raising for its overseas projects,
the initiative could further strengthen Mauritius
as the leading regional RMB offshore
centre.
“Mauritius is capable
of becoming the
gateway for China
into Africa”
China announced its roadmap for the Belt and Road Initiative in 2013.
The blueprint was to create two corridors – the Silk Road Economic Belt
and the 21st Century Maritime Silk Road – to better connect cities in the
eastern, middle and western parts of China and its major seaports, to Asia
Pacific and Eastern Europe, the two biggest growth engines in the global
economy today.
The plan aims to develop a new economic cooperation framework within
the region by promoting infrastructure development and trading between
countries.
For Mauritius the Belt and Road Initiative offers enormous business opportunities
for Chinese business people wanting to invest into Africa.
Mauritius’ key business sectors, including infrastructure, finance, trading
and logistics exactly match the focus of the Belt and Road Initiative. But
whether or not we are able to grasp these opportunities depends greatly
on how much we understand and embrace the Belt and Road Initiative. I
believe Mauritius is well equipped with a dynamic suite of financing channels,
a well-established capital market, a reputable financial system and
outstanding financial talents. We are capable of becoming the gateway for
China into Africa with support in different ways such as project financing,
bond issuance, investment, financial management and foreign exchange
management. As the commercial activities between China and countries
along the Belt and Road become more frequent, RMB will gain wider acceptance.
HSBC is regarded as the pioneer in the RMB internationalization
journey. I am hoping we can leverage this leading positioning to forge
ahead with this endeavour by supporting the Belt and Road Initiative. Asia
is playing an increasingly important role in the global economy. We shall
seize the business opportunities that are being presented to strengthen
Mauritius’ status both in the region and in the world. “
36 December 2016

BANKING
38 December 2016

Transforming
trade in Africa
For a continent as big and diverse as Africa, regional integration is a
mammoth task, but the longer African nations delay it, the more slowly
Africa will develop, with intra-regional trade failing to take off.
While 60 per cent of the EU’s trade is
within the EU, and 25 per cent of Asian
trade is within Asia, the comparable
figure for Africa is only around 10–12 per cent .
Regional economic integration, facilitating such
trade across Africa, has made some significant
contributions but the pace has been limited by
notable challenges.
For intra-regional trade to flourish, governments
across Africa must create more ‘trade friendly’
regulation and infrastructure, in particular:
• Work together to create regional transport
corridors. Currently, transport costs in Africa
average about 11.4 per cent of the value of
exports, compared to around 6.8 per cent for
developed economies.
• Remove barriers to the mobility of labour. Africans
need visas to get into at least two-thirds
of other Africa countries, exacerbating skills
deficits.
• Enhance and support regional technology infrastructure,
such as the emergence of a digital
trade settlement system called Bank Payments
Obligation (BPO).
• Address unreliable and costly energy supply
and the relatively low penetration of information,
communication and technology networks
• Make African currencies convertible, lowering
the cost of intra-regional trade. Currently,
payments have to be settled in international
currencies, such as dollars or euros, with high
intermediation costs.
• Create less restrictive fiscal and regional policies
to encourage intra-regional trade.
Financial Market Integration
Despite the challenges that lie ahead, various
initiatives have made a significant contribution
towards regional integration.
Financial market integration has taken a step forward
through the setting up of monetary unions,
such as the West African Economic and Monetary
Union, the Central African Economic and Monetary
Union, and the Common Monetary Area
in Southern Africa. We have also seen more regional
banks available, and helping to facilitate
cross-border trade.
BPO, the new digital trade settlement system, has
increased the speed, reliability and convenience
of international trade, while mitigating risks and
reducing costs for the buyer and seller. And new
bilateral trade deals in 2015, for example between
Uganda and Kenya and between Rwanda
and the Democratic Republic of Congo, should
enable faster clearance of goods and reduce the
cost of doing business in the region.
The main challenge to integration has been in national
plans, which look great on paper, but are
a challenge to deliver because of technology, infrastructure,
transport and budgetary constraints.
Private public collaboration
To move regional integration forward, governments
in Africa can collaborate with, and draw on
the expertise and experience of, the private sector
to shape trade policies and establish priority
areas for effective and sustainable trade in Africa.
The private sector, especially the financial sector,
can assist by using strong balance sheets to
make capital accessible. The public sector, as the
catalyst of monetary policy, can review overlapping
and restrictive policies to make integration
more effective. The telecommunications industry
on the other hand, can assist by making the latest
technology platforms accessible to the public
sector.
Africa’s current demographics are set to make the
continent home to the world’s youngest population
by 2040. An expanding middle class, now put
at 355 million, raises Africa’s profile as a market
and a destination for investment. If intra-regional
trade became easier, there’s no telling what it
could do for the continent’s overall trade levels
and, ultimately, its growth potential.
By Richard Etemesi,
Chief Executive Officer, South
Africa and Southern Africa,
Standard Chartered
Mauritius International Financial Centre
39

SAVE THE DATE
23rd & 24th March 2017
MAURITIUS IFC’s
FINANCE AFRICA
CONFERENCE 2017
DRIVING FINANCE, UNLOCKING PROJECTS
For more details, email us at finaf@fspa.mu
Organised by
MAURITIUS IFC
D I R E C T O R Y
The Financial Services Promotion
Agency (FSPA), operating under the
aegis of the Ministry of Financial
Services, Good Governance and
Institutional Reforms, is inviting
operators within the financial
services sector to register their
respective companies to be listed
on the Mauritius IFC Directory which
will be accessible at
www.mauritiusifc.mu/directory/
The Mauritius IFC Directory, featured
within the main Mauritius IFC portal,
is a common platform of contacts
for all financial services sector
operators in Mauritius.
Interested operators are invited to
contact the FSPA at
directory@fspa.mu
For more information visit our website on, www.mauritiusifc.mu or email us at link@fspa.mu

BANKING
Opportunity for debt
structuring through
Mauritius
A Protocol amending the long established Mauritius-India double taxation avoidance
treaty (“Treaty”) was signed on 10 May 2016 between the Government of Mauritius
and the Government of the Republic of India. A number of amendments are
expected to become effective under the revised Treaty, one of which relates to
Article 11 on Interest.
As from 1 April 2017, withholding tax on
interest arising in India and paid to a
Mauritius resident company will be limited
to 7.5%, compared to the existing provision
under which the Indian domestic rate of 20%
(plus surcharges) applies.
As far as capital gains are concerned, a gain arising
on a sale of debt investments held by a Mauritius
resident company in an Indian resident
company remain unaffected under the Protocol,
and will continue to be exempted from tax in
India.
Following the above amendment, debt structuring
through Mauritius is likely to become an
attractive proposition for foreign investors seeking
to invest in India.
The returns to foreign investors from India may
be structured as capital gains or interest income,
By Shamima Mallam-Hassam,
Head of Business Services,
CIM Global Services and
Gyaneshwarnath Gowrea,
Managing Director, CIM Tax
Services.
Mauritius International Financial Centre
41

BANKING OPPORTUNITY FOR DEBT STRUCTURING THROUGH MAURITIUS
ILLUSTRATIVE SCENARIO FOR USING MAURITIUS AS AN INTERMEDIATE JURISDICTION
Offshore
Insvestor
Mauritius
SPV
India
Interest
payments
Target
Debt funding
which should substantially reduce the effective
tax liability.
Offshore debt funding
There are various ways that an investor could
contemplate providing debt into India (other
than external commercial borrowing). These include
the following routes:
• Through fully and compulsory convertible debentures
under the Foreign Direct Investment
(“FDI”) route;
• Through purchase of Non-Convertible Debentures
(“NCD”) of an Indian company on the
stock exchange under the Foreign Portfolio Investment
(“FPI”) route;
• Through purchase of NCD and /or optionally
convertible debentures (“OCD”) of an Indian
venture capital undertaking or a venture capital
fund under the Foreign Venture Capital Investment
(“FVCI”) route.
Instruments which are not fully convertible are
considered external commercial borrowings
and are governed by the ECB regime. Currently,
the withholding tax on interest payments in
respect of such instruments is 5%. The ECB regime
however, requires RBI approval.
Using Mauritius as an intermediate
jurisdiction
The use of Mauritius as an intermediate jurisdiction
for investment into India may enable
foreign investors to minimize tax leakage on the
investment whilst also satisfying the commercial
requirements of the envisaged transaction.
One of the key benefits of debt structuring from
a tax perspective is that the interest accruing on
the debt should be tax deductible by the Indian
company (at the standard Indian corporate income
tax rate of 30%), provided the local thin
capitalization rules (ratio of debt to equity), if
any, are satisfied.
This benefit may also be impacted by other tax
leakages that may apply when interest expense
is repatriated to the lender. In the present case
of an Indian borrower and a Mauritian lender,
the tax implications of a debt funding into India
via Mauritius should result in a net benefit of
19.5%, as illustrated below:
Summary of Effective Tax benefit Tax benefit (%)
Corporate income tax deductibility of interest expense in India 30.0
Withholding tax suffered on interest payment in India (7.5)
Maximum effective corporate income tax rate in Mauritius (3.0)
Potential net tax benefit 19.5
Common types of debt investment
opportunities:
a) Non-Convertible Debentures
In order to raise finance, the Indian Target company
may issue Non-Convertible Debentures
(“NCD”) listed on the Indian Stock Exchange. The
NCD is governed by the FPI route, as indicated
above. Listing of non-convertible debentures on
the wholesale debt market of the Bombay Stock
Exchange and the appointment of required intermediaries
(Debenture trustee, Rating agency
and Registrar/transfer agent) is a fairly simple
C
M
Y
CM
MY
CY
CMY
K
42 December 2016

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BANKING OPPORTUNITY FOR DEBT STRUCTURING THROUGH MAURITIUS
and straightforward process (may take about
three weeks).
In order to undertake this investment, the foreign
investors may pool funds together in a
Mauritius SPV vehicle, which in turn, will purchase
the listed NCD on the Indian stock market.
From a tax perspective, the interest expense
should be tax deductible in India although a
withholding tax rate of 7.5% will apply when
interest payments are made to the Mauritius
SPV. From a Mauritian tax perspective, the interest
income will be taxed at an effective rate of
3% only. On an exit, the NCD may be sold on
the floor of the stock exchange. Under the Protocol,
if there is disposal of any property other
than shares, the capital gains will only be taxed
in the resident state i.e. any gains arising on the
sale of the NCD will be taxable in Mauritius only.
As there is no capital gains tax in Mauritius, the
investor will benefit from a tax free exit.
Debt investments could also be structured via
Compulsorily Convertible Debentures (CCDs).
Such instruments could be converted into equity
prior to an IPO process or sold directly to
third party buyers upon a private sale. In these
scenarios, a tax free exit should continue to be
available to the investors.
b) Distressed debt opportunities
Based on recent statistics from the Reserve
Bank of India, there has been a sharp rise of
Non-Performing Loans (“NPLs”) held by Indian
debtors and this is expected to continue in the
foreseeable future. In order to boost foreign investment
in this sector, the Government of India
brought recent changes to facilitate foreign
investment in Asset Reconstruction Companies
(“ARC”) which is a mechanism that may be used
by foreign investors to acquire distressed debts
in India.
In order to undertake this investment, a foreign
investor may set up a fund company in Mauritius,
the sole purpose of which will be to take
over distressed debts in India at price below
the face value of the NPLs via an ARC. Until the
company affairs are settled, the Mauritius Fund
may continue to derive interest from India during
the life of the investment and benefit from
the low withholding tax rate of 7.5%. Depending
on how the ARC is structured in India and
the applicable regulatory regime, Investors
may be able to benefit from a tax free exit in
the event that a gain is realised upon maturity
of the NPLs.*
44 December 2016

“The returns to foreign investors from India may be
structured as capital gains or interest income, which
should substantially reduce the effective tax liability.”
c) Exchange Traded Funds (“ETFs”)
Foreign investors may also consider investing
into the Indian debt market via Exchange Traded
Funds which are listed and traded on the Indian
Stock Exchange. Globally, ETFs have opened
a whole new spectrum of investment opportunities
for retail as well as institutional money
managers. ETFs enable investors to gain broad
exposure to entire stock markets in different
countries and specific sectors with relative ease,
on a real-time basis and at a lower cost than
many other forms of investing.
In order to undertake such investments, foreign
investors may consider setting up an ETF vehicle
in Mauritius which would invest in the bond
market in India. Any interest payments made to
the Mauritius ETF vehicle would be subject to a
withholding tax at a rate of 7.5%. As above, no
capital gains tax should arise on an exit.
The impact of GAAR
With the introduction of GAAR, investors have to
be mindful of the need to build adequate substance
in the Mauritius structure to demonstrate
the commercial rationale of investing through
Mauritius. There are a plethora of reasons which
support this rationale:
• Rule of law in Mauritius. The ultimate court of
appeal is the Judicial Committee of the Privy
Council in United Kingdom and this adds substantial
confidence around the legal parameters
of a transaction. In addition, Mauritius is
already positioning itself as an International
Arbitration Centre for resolution of conflicts
between commercial parties;
• Contracts certainty. There is a modern legal
and regulatory framework in place in accordance
with international standards;
• Mauritius is an established, tried, tested and
trusted jurisdiction with lower administration
costs and skillsets compared to other competitor
jurisdictions:
a) Young, talented and qualified workforce
that carries out legal, secretarial, and accounting
tasks associated with companies;
b) Adopted international financial reporting
standards, but can also adapt to report under
internationally acceptable accounting
standards such as US GAAP, UK GAAP, SA
GAAP, etc.
• Mauritius enjoys a favourable time-zone with
India which aligns with market activity
• An Investment Promotion and Protection
Agreement (“IPPA”) is in place to give investment
protection against expropriation and nationalization
• No foreign exchange control to allow redeployment
of capital to other projects without
RBI intervention;
• Mauritius is a participant in the OECD initiative
on BEPS, which demonstrates the country’s willingness
to adhere to international standards
• Signatory to tax exchange information agreements
which allows for transparency
• The Mauritius Revenue Authority entertains
information exchange requests from the competent
authority in India and these are being
discharged to the satisfaction of the Indian authorities
• Financial Services Commission of Mauritius
has signed MoU;
a) With Securities Exchange Board of India
that allows exchange of information between
the two regulators;
b) With European Securities and Monetary
Authorities for the implementation of the
Alternative Investment Fund Managers
Directive.
Traditionally, Mauritius has been known as a
jurisdiction to structure equity investment into
India. With the coming into force of the Protocol
amending the tax treaty with India, Mauritius
has now emerged as an attractive platform
for foreign investors seeking to invest in India
debts. It is important to stress out that the Mauritius
International Financial Centre is a tried,
trusted and tested jurisdiction. Its legal and
regulatory frameworks are in compliance with
international norms and standards. Also, Mauritius
has a real value proposition in terms of its
sophisticated financial eco-system and companies
using Mauritius to structure their investment
into Indian debts can easily demonstrate
substantiated activities to meet the criteria set
up by GAAR.
Mauritius International Financial Centre
45

BANKING
Private Banking and
Wealth Management:
New challenges shaping
a more competitive
landscape
The wealth management market is expanding exponentially; people are becoming
wealthier in countries such as India, China and Indonesia. Mauritius, with its strong
regulatory framework and reputation as a stable and sophisticated banking and
financial hub, is primed for a surge in private banking solutions catering to the
Asian market, while also providing solutions to clients from the African continent.
46 December 2016

As evidenced by the New World
Wealth report – The Top African Cities
for Millionaires – issued in September
2015, there is a huge pool of
163,000 millionaires living in Africa with combined
wealth holdings of USD 670 billion. This
reflects the competitive scenery that is shaping
up, both on the Mauritian banking front as well
as globally as everyone is trying to get a bigger
share of the cake.
AfrAsia Bank is one of the numerous banks striving
at capturing this pool of HNWI. With competitive
investment products and a portfolio of
wealth management services tailored to best
match the financial requirements of each client,
AfrAsia Bank has managed to record a 25%
growth in its wealth management clients from
2014 to 2015. However, the Bank recognises
that, operating in an ever changing environment,
banking institutions need to continually
strive to provide offerings that would be above
the market average.
AfrAsia Bank endeavours to provide a customer
experience that exceeds its clients’ expectations
at all times while growing their legacy as if it
were their own. In so doing, innovative banking
is a key component of its banking culture. The
proper blend of providing a digital banking experience
with a dedicated human touch remains
the Bank’s signature. For example, a New Resident
Desk, a first on the Island, has been set up
to better serve its clients choosing expatriation
to Mauritius by facilitating the administrative
procedures such as residency permit, acquisition
or rental of property, as well as school admissions.
The Bank has also set up an External
Asset Manager (EAM) desk as a dedicated point
of contact for Asset Managers, which is also
backed by collaborative agreements with leading
investments organisations globally. Another
key differentiator is the availability of its Global
Custody services, facilitating clients’ investments
in more than 50 countries and providing
access to specialised fund houses whilst offering
clients the ease of accessing online valuation
reports anytime and anywhere.
Attention to details
Nevertheless, the economic scenery is becoming
harder at present times and there are new
challenges and threats on the market now compared
to earlier times. Providing an excellent
customer service to HNWI is not limited to growing
their wealth only anymore. Clients are nowadays
looking for more than just private bankers
to handle their finances. Private bankers and
wealth managers should equip themselves
with the ability to understand the key objectives
behind the client’s investment and tailor
investment products and offerings to the needs
of each particular client with the aim of providing
an excellent à la carte banking experience.
Going a step further, wealth managers should
be able to proactively keep track of changing
clients’ needs and advise them accordingly to
not only improve clients’ return on investments
quantitatively but also qualitatively. These skills
are crucial for private bankers and wealth managers
to be successful as clients nowadays will
rate their financial advisors and connect with
their peers to share their experiences globally
through online forums.
Attention to details is key, and it becomes the responsibility
of the private banker to proactively
carry out an informal market research about the
offerings of the bank. For example, according to
a 2016 Global Wealth Management survey on
the Experience Factor by Ernst and Young, one
third of clients are not satisfied with the method
of being charged for the services they are contracting
for while 40% of clients would agree to
associate themselves to fewer wealth managers
By Guillaume Passebecq,
Head of Private Banking
at AfrAsia
Mauritius International Financial Centre
47

BANKING PRIVATE BANKING AND WEALTH MANAGEMENT
should they have the right incentives to do so
instead of diversifying their portfolio across various
institutions, therefore, decreasing the likelihood
of asset fragmentation. Hence, bankers
and wealth managers should be able to gauge
the touch points that will enhance the exclusive
banking experience of HNWI.
“Bankers and wealth managers
should be able to gauge
the touch points that will
enhance the exclusive banking
experience of HNWI.”
Furthermore, the digital era is only adding another
edge to the competition with the growing
significance of digital advisors. Not yet a popular
phenomenon in Mauritius, the concept of
digital advisors offering their services at a lower
cost, is a threat to the traditional private banking
and wealth management sphere. As per the
Global Wealth Management Survey 2016 by Ernst
and Young on The Experience Factor, 59%
of clients surveyed have reported that websites
and digital channels are their main channel for
receiving wealth management and banking
advices compared to 29% who still preferred
meeting their financial advisors in branches.
This enhances the need for private bankers and
wealth managers to highlight the value-adding
aspect of traditional private banking and wealth
management though personal interactions.
Understand our clients’ risk appetite
“As private bankers and wealth managers, it
is crucial that we do not position ourselves as
mere product sellers; we should be committed
to first fully understanding our clients’ businesses
and their risk appetite before we design a
product for their unique needs. Private Bankers
are first and foremost people who build strong
relationships with their clients, treating the
latter more as partners rather than just clients.
This requires of us that we keep abreast of the
evolving requirements of our clients, as well as
of changing market dynamics. As a matter of
fact, one of AfrAsia Bank’s main challenges is to
remain a reliable financial partner and solution
provider through times of high risks, vulnerability
or uncertainty”.
AfrAsia Bank surely has the advantage of being
domiciled in Mauritius which, over the last decade,
has developed into an attractive, safe and
cost-effective proposition for individuals looking
to grow their wealth. Besides a robust banking
system in place, there are a number of sound
reasons why individuals consider Mauritius as
their preferred financial centre:
• It is Africa’s most peaceful country. Ranked 23 rd
on the Global Peace Index 2016, it claims pole
position on the continent. Growth of 3.7% is
projected for 2017.
• It is welcoming. Various schemes allow non-nationals
to qualify for residence permits or to
work or retire in Mauritius. Plus there’s a bilingual
and skilled workforce.
• It has an attractive tax regime. With a maximum
of 15% for both corporates and individuals,
it has amongst the lowest tax rates globally.
Moreover, the country has negotiated
investment promotion and double taxation
agreements with 21 other African countries.
• It is business-friendly. The World Bank ranked
Mauritius first in Africa for ease of starting a
business in 2016. It has a respected business
regulatory framework and reforms such as the
Good Governance and Integrity Bill. What’s
more, there’s no Capital Gains Tax, and free
repatriation of profits, dividends and capital.
• It is a stable and sophisticated finance centre.
Strategically located and in a convenient time
zone, Mauritius’s private banking solutions
cater to the African market as well where the
growth in high-net-worth individuals is highest.
Mauritius has all the ingredients to be to
Africa what Singapore is for Asia and what
Luxembourg is for Europe.
The private banking and wealth management
domain is becoming more lucrative for
the financial and banking businesses as well
as competitive by the hour on a global scale.
Challenges are no longer geographically limited,
hence the need for private bankers and
wealth managers to level up their games and
offer something more exclusive to the HNWI
segment.
48 December 2016

GOVERNANCE AND REGULATORY
Automatic exchange
of information:
Transparency,
cooperation and
accountability
The success of Mauritius as an International Financial Centre depends on maintaining
our reputation as a trusted and responsible jurisdiction. It is important for Mauritius
to adhere to international standards including Automatic exchange of information
(AEOI) under the Common Reporting Standard (CRS) as it will enable us to
strengthen our framework for international cooperation to combat cross border
financial crime.
Automatic exchange of information
(AEOI) involves the systematic and
periodic transmission of “bulk” taxpayer
information such as account
balance/value, dividends, interest, royalties
etc…by one country to another. Automatic exchange
of information is not a new phenomenon.
It existed before the Foreign Account Tax
Compliance Act (FATCA) and the Common Reporting
Standard. What is new is the standard
rules and the standard way of transmitting data.
The origin of FATCA can be traced to 2009 when
the Swiss Bank UBS was found guilty by the
Court to have assisted American nationals to
evade paying American taxes. As a result, UBS
agreed to pay the US Government US$780 million
in fines, restitution and provide the names
of suspected tax cheats. This was the impetus
for the US Congress to enact FATCA.
The adoption of FATCA coupled with the global
financial crisis built a significant political momentum
for putting in place a global standard
for automatic exchange of information. The
report presented by the Organization for Economic
Cooperation and Development (OECD)
on automatic exchange of tax information was
endorsed by the G20 in Mexico in 2012, which
led to the development of the Common Reporting
Standard by OECD.
It is remarkable that at present more than 100
countries have already committed to implement
CRS by 2017 or 2018. OECD wants tax evaders
to receive the strong message that soon there
will be no place to hide.
Legal and administrative framework to
implement CRS
The Mauritius legal framework contains principles
and rules that make international cooper-
By Sudhamo Lal, Director
General MRA
Mauritius International Financial Centre
51

Partners in Progress and Prosperity
Celebrating
2 0 0 6 -
2016
years
of
Integrity, Responsiveness, Fairness,
Transparency & Accountability
Ehram Court, Cnr Mgr. Gonin & Sir Virgil Naz Streets, Port Louis, Mauritius
• Tel: +230 207 6000 • Website: www.mra.mu

GOVERNANCE AND REGULATORY AUTOMATIC EXCHANGE OF INFORMATION:
TRANSPARENCY, COOPERATION AND ACCOUNTABILITY
“The Mauritius Revenue Authority (MRA)
has successfully implemented the system to
comply with the requirements of FATCA.”
ation and exchange of information with other
countries possible. The Mauritius Revenue Authority
(MRA) has successfully implemented the
system to comply with the requirements of FAT-
CA. Financial Institutions were cooperative and
some 3300 reports were transmitted to Internal
Revenue Service (IRS) for the first reporting year.
Mauritius is now fully committed to implement
OECD Common Reporting Standard and will only
engage in automatic exchange of information
with jurisdictions that have a strong rule of law
and can ensure confidentiality of information exchanged
and prevent its unauthorized use.
This is considered to be particularly important
as AEOI entails the transmission of sensitive
taxpayer information which should be safeguarded.
Also, there must be reciprocity with
any future AEOI partners in terms of information
exchanged.
These conditions are necessary to ensure that
we continue to respect legitimate expectations
for taxpayer confidentiality as well as ensure
that AEOI is effective in tackling offshore tax
evasion. It should not result in fund flows to less
regulated jurisdictions.
Worldwide level playing field
The success of CRS relies heavily on its adoption
by all relevant jurisdictions in order to establish a
worldwide “level playing field”.
MRA’s role is that of an intermediary between financial
institutions and tax authorities of other countries.
Under CRS, Mauritius Financial Institutions will
have to report annually to MRA on certain financial
accounts held by non-residents for eventual exchange
with relevant partners. The first reporting
period ends on 31 December 2017 and reporting
will have to be made to MRA by 31 July 2018 for
exchange with the relevant treaty partners by 30
September 2018.
MRA together with the Government is working
closely with the industry to address issues that may
arise as we work towards implementation of CRS.
The steps taken by MRA to ensure effective implementation
of CRS are:
• MRA staff have followed a workshop conducted
by OECD on CRS
• We have set up a dedicated team to answer
queries pertaining to FATCA and CRS
• The legal framework is in place; The Convention
on Mutual Assistance in Tax Matters entered
into force on 1 December 2015. The
Income Tax Act has already been amended
to ensure compliance with the Standard. CRS
Regulations are currently being drafted
• CRS Guidance Notes (GN) have been issued.
Workshops is being conducted by MRA to further
assist stakeholders
• OECD questionnaire on confidentiality has
been completed. The expert panel found that
Mauritius has the legal and administrative
framework to guarantee data safeguard and
confidentiality
• The IT platform put in place for FATCA is being
customized for CRS purposes.
OECD has recently established 3 objective criteria
to identify non cooperative jurisdictions
with regard to tax transparency. One of them is
the implementation of automatic exchange of
information.
Mauritius International Financial Centre
53

GOVERNANCE AND REGULATORY
Mauritius continues to
develop its financial
centre in line with
international norms
The success of Mauritius is largely due to its agility to adapt to the changing
international political and economic environment. It steered its way through
the 2008 financial crisis with bold measures and has consistently strived to
nurture its image as a clean and transparent international financial centre.
Mauritius is often cited as a success
story – a small multicultural state
with political stability which has
paved the way from an agriculture
centric economy to a diversified economy
based on pillars such as manufacturing, tourism,
ICT, and financial services. Mauritius stands as
an upper middle income country aiming to become
a high income country in the near future.
Mauritius has introduced modern legislations
over time including the Financial Intelligence
and Anti-Money Laundering Act 2002, The Prevention
of Corruption Act 2002 as well as The
Prevention of Terrorism Act 2002 to combat the
illicit transfer of funds and money laundering.
It has also established strong regulatory insti-
54 December 2016

tutions in the like of the Bank of Mauritius and
the Financial Services Commission to safeguard
the interest of stakeholders across the banking
and financial services sectors in line with international
norms. This regulatory environment has
allowed Mauritius to maintain effective enforcement
mechanisms, supervise cross border transactions
as well as share information with foreign
institutions in order to tackle crime and money
laundering.
“Mauritius
continues to
engage with its
treaty partners to
respond to changes
in the international
landscape as well
as comply with
best practices.”
Simple but compliant business
environment
Mauritius’ success as an international financial
centre also rests on its ability to offer a simple
but compliant business environment. As illustrated
in the Ease of Doing Business Report
2017 of the World Bank Mauritius ranks 49th
out of 190 countries. Mauritius has a ‘hybrid’ legal
system; combining both the French civil law
and British common law practices. Commercial
activities are regimented under common law
and supplemented by a comprehensive set of
legislations, including the Companies Act 2001,
the Securities Act 2005, the Financial Services
Act 2007 and the Insolvency Act 2009. The local
legal environment offers a good mix between
business facilitation and investor protection.
As a small island state, Mauritius is reliant on
external trade and it has developed close bilateral
and regional trade links with partners across
all continents. On the regional front, Mauritius
is part of trade communities such as the Common
Market for Eastern and Southern Africa
(COMESA) as well as the Southern African Development
Community (SADC) which offer free
trade areas across a network of states in Africa.
In order to facilitate trade flows, Mauritius has
also signed 43 tax treaties, significantly, based
on the Organisation for Economic Cooperation
and Development (OECD) model, which provides
for the avoidance of double taxation, exchange
of information and mutual assistance
in the recovery of taxes. Mauritius continues to
engage with its treaty partners to respond to
changes in the international landscape as well
as comply with best practices. Recently, the tax
treaties with India and South Africa have been
renegotiated and revised. Further, Mauritius
continues to show its commitment to adhere to
international initiatives to promote a healthier
business and tax environment, being one of the
early adopters of agreements for the exchange
of information under the US Foreign Account Tax
Compliance Act (FATCA) and the EU’s Common
Reporting Standards (CRS). Those measures
have helped promote better tax transparency as
well as compliance.
From a tax perspective, Mauritius also prides
itself as a jurisdiction of substance. Global
Businesses operating in Mauritius are required
to have substance such as the board meetings
being chaired and held in Mauritius, accounting
records being kept in and audited in Mauritius
and principal bank accounts being held in
Mauritius. These are widely accepted criteria to
determine the place of management and control
of a company. As a proactive measure, new
rules have been added in 2015 to increase the
economic presence of the entities in Mauritius,
for example, the setting up of a physical office in
Mauritius or the employment of staff in Mauritius.
Thus, it comes as no surprise that the OECD
has rated Mauritius as a largely compliant jurisdiction
with respect to tax laws and is also on
the white list of the OECD and EU.
The current global business environment is ever
evolving and the future success of Mauritius will
depend to a large extent on its agility to adapt to
changes. The track record of Mauritius suggests
that it has the attributes to continue to develop
itself as an attractive international financial centre
in line with international norms.
By Anthony Leung Shing,
Partner at Pricewaterhouse
Coopers.
Mauritius International Financial Centre
55

FUNDS TRUSTS
REGULATORY BUSINESS
M&A COMPLIANCE
“We value our clients
and strive to deliver
high quality services”
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providing both French and Mauritian legal
services to its local and international clients.
Registered as a law firm under the Law Practitioners’ Act 1984
Suite 315, Ebene Junction, Rue de la Democratie, Ebène, Republic of Mauritius
t : (+230) 465 4199 | f : (+230) 465 4183 | www.gplegal.mu

GOVERNANCE AND REGULATORY
What is the outlook
for trade agreements
post-Brexit?
The unfolding of the post-Brexit environment seems to be holding the business
world in suspense. After almost six months of uncertainty over the outcome of
British referendum to quit EU, the House of Commons has massively voted in
favour of a plan to trigger Article 50 of Lisbon Treaty by end of March 2017.
The British Supreme Court also has given
the comfort that it will not “overturn
the result of the EU referendum”.
However, it is not clear when the UK
will kick off trade negotiations with its different
partners. It is also not clear how the UK will
accommodate its trade regime with EU or how
many trade agreements it can negotiate in parallel
with the rest of the world. There is no indication
of how the UK will re-define its trade
relations with its Commonwealth constituency.
Then, it is too early to pronounce on what could
be the final position of the British population
once the Brexit fever has cooled down.
Trade policy for UK has, until now, been conducted
exclusively at the EU level. Over half of
Britain’s trade is with the EU, while its exports
to and its imports from 60 other countries are
also governed by agreements struck with the EU
bloc. Once the UK government officially notifies
its Brexit decision to Brussels, all the EU trade
agreements of which the UK has been automatically
part as an EU member state would need to
be re-negotiated on a bilateral basis. For Mauritius,
the UK has always been its most important
traditional trade partner. Its acquired trade
rights emanating from the long-standing Commonwealth
preferences were incorporated into
the EU trade regime when the UK joined the EU
Common Market in 1972. With UK leaving the
EU, there will be an urgent need for Mauritius to
re-negotiate its trade relations with UK so that
its trade benefits will not be impaired.
The EU currently has trade agreements with
52 countries, and it is further negotiating trade
agreements with another 72 countries. As a fallout
of Brexit, the UK would therefore need to
re-negotiate or start new bilateral negotiations
on around 124 trade agreements, plus one additional
trade agreement re-defining its own trade
status as a third country vis-à-vis the EU. To prevent
disruption to the trade flows on which the
British economy has come to depend, securing
trade deals with the EU and with non-EU countries
including the US, India, China, Japan and
Australia would be a matter of urgency. Signing
new trade deals with other countries will be a
big challenge for UK negotiators. With a limited
number of negotiators, they will not be able to
respond to all calls for negotiations. They will
have to prioritize the countries with which they
would like to engage in trade negotiations.
Complex and time consuming
Renegotiating these agreements would take
time. On average it takes some six years to negotiate
a trade deal, provided that there are full
political commitments and adequate negotiating-team
mobilization from both sides. While
UK would have more flexibility when negotiating
alone, it has to be reckoned that its bargaining
power would be considerably reduced
compared to that of EU, which is one of the top
three traders in the world. But what would be
more demanding and protracted would be the
negotiation of a trade agreement between UK
and EU: apart from taking considerable time, it
might become hostage of consensus decision
of 27 EU members. Re-establishing UK’s trade
By Assad Bhuglah, former
Director of Trade Policy at the
International Trade Division,
Ministry of Foreign Affairs,
Regional Integration and
International Trade, Mauritius.
Mauritius International Financial Centre
57

GOVERNANCE AND REGULATORY WHAT IS THE OUTLOOK FOR TRADE AGREEMENTS POST-BREXIT?
agreements and networks would be a long and
complex process.
While it is very likely that UK would have to engage
in a model of trade arrangements similar
to that of the Free Trade Area (FTA) with non-EU
members, it is not clear what type of trade agreement
UK and the EU would settle for. Evidently,
the UK would push for a FTA-type of agreement
so that it can have more sovereignty and greater
latitude in designing its foreign trade policy.
But the EU is already insisting that movement of
people should be part of the re-negotiated trade
deal, to which the British are allergic. In the final
analysis, the UK and the EU could come to terms
with a model of trade agreement that could fall
in-between the flexibility of a FTA and the rigidity
of a Customs Union. Furthermore, it is also not
clear how the UK would proceed with trade negotiations
with the ACP group of countries. Will
it agree to continue on the same basis of the
terms and conditions contained in the Economic
Partnership Agreements? Will it prefer to have
a separate deal with the Commonwealth group
within the ACP? Or will it prefer to negotiate bilaterally
with them? Or will the UK opt to extend
the bulk of the lesser developing countries the
unilateral General System of Preferences(GSP)?
The GSP-route will not be a solution to Mauritius
because it runs the risk of being graduated out
of this preferential scheme owing to its relatively
high-income status.
After having completed the bilateral trade deals,
the parties will have to notify the WTO, which
will start a scrutiny process. This will be a complex
and time consuming exercise which will be
made all the harder by the fact that potentially
every single member of WTO’s 162 membership
could question the contents of these trade
agreements. These trade agreements will pass
the test of WTO-compatibility once all WTO’s
members give their concurrence. It will be a protracted
process, especially with the growing role
of China, Russia and other emerging economies
within the WTO system.
Third party equivalence
“The financial services sector, in
Mauritius and beyond, will be
watching closely to see which
model is followed. Will the current
system of ‘passporting’ survive…?”
The financial services sector, in Mauritius and
beyond, will be watching closely to see which
model is followed. Will the current system of
‘passporting’ survive, whereby a financial services
company licensed in one EU member state
is free to set up in another, or will that fall by
the wayside in the case of a ‘hard Brexit’? Will
the discussions between UK and EU focus on
third party equivalence in financial services, and
what would be the implications for third countries
like Mauritius? There is a big question mark
over whether UK will remain part of the single
market in any shape or form, and there will be
much analysis of the implications of the various
degrees of detachment, needed politically,
which each model could offer and the commercial
consequences of these.
The entire process of trade negotiations or
re-negotiations can only start once UK decides
to trigger the Article 50 of the EU Treaty provision
on withdrawal of a Member State from
EU, by notifying its intent to leave the EU. Now
that the British Parliament has overwhelmingly
backed Prime Minister Theresa May’s plan to
trigger Article 50, the formal process of leaving
the European Union will begin by the end of
March 2017. After the formal notification of London
to Brussels, Britain and the EU will have two
years to complete the withdrawal process, unless
both parties unanimously decide to extend
this period. As time passes, nothing prevents for
another movement within UK to build up and
call for fresh referendum to re-visit the Brexit
decision. On the other side of the English Channel,
the European Parliament’s chief negotiator
has recently confirmed that EU negotiators will
offer British people the chance to individually
opt-in and remain EU citizens as a proposal
in Brexit negotiations. Such cajoling diplomacy
will certainly reinforce the camp of pro-EU
campaigners in Britain and will gain momentum
when the painful economic re-adjustment starts
impacting on the British people. Post-Brexit has
a stormy way ahead.
58 December 2016

CAPACITY BUILDING
Education is key when
striving for growth
As we approach the 10 year anniversary of the global financial crisis that saw the
collapse of markets and an unprecedented liquidity crisis, it would seem a good time
to reflect on how much has changed within the financial services sector since 2008.
By Kate Lander, CFA, Chief
Learning Officer at Fitch
Learning
In that time, markets and technology
have become more intertwined (electronic
trading platforms and even a digital
payment currency in the form of Bitcoin)
as well as ever-increasingly global
with the entrance of new market leaders,
as evidenced by the fact that Chinese banks
now represent 4 out of the top 5 largest banks
by assets 1 .
However, it is the swathe of damning headlines
around the world focused on misconduct and
weak governance, poor leadership and over
reliance on overseas talent that have overshadowed
the sector; illustrating it is actually the
people that work within the financial institutions
that will restore the trust of investors, help
to attract investment and provide a strong platform
for growth.
Looking at global case studies of success, for example
Singapore’s achievement in becoming a
leading hub for financial services in Asia-Pacific,
we see that more often than not strong markets
have a well-developed and professional educational
sector. The reality, but also so often the
challenge, is that a sustainable economy must
be able to grow and educate the talent it will
need in the future, but also be able to retain
them once they enter the working world.
So what are the common characteristics of an
education system that supports the growth and
success of financial services? We could group
these into several areas:
Leadership from Government
The private sector is inherently, and understandably,
relatively short term in its focus; filling a
skills gap today with a hire from overseas, or
even relocating operations to where the talent is
plentiful, delivers return and satisfies investors
far more quickly than investing time and money
over decades to develop home grown staff.
Therefore government support is crucial to the
establishment of a strong workforce. That support
obviously requires funding, but must also
follow a clear long term strategy, be able to
co-ordinate the efforts of grass roots education,
funded apprenticeship-style or starting work
programmes, deliver clear training and competence
frameworks to guide financial employers
and support engagement in global initiatives.
In Mauritius, the strategy to deliver the Economic
Development Vision 2030 has already
recognised the critical role that education will
play in transforming the country into a regional
platform for trade, investment and services.
Go back to school
For generations, future doctors have been well
catered for and encouraged by most national
curriculums to develop a passion for how our
bodies function; through learning simple biology
at school many juniors decide on a career
path into medicine well before entering higher
education.
Similarly, the school-based education system
needs to prepare our children better to become
the successful financiers of the future. Far
too few national curriculums have any level of
financial literacy as part of their core studies.
Surely a basic grounding in finance could also
help all our entire population manage their personal
finances better as well?
Supporting the entry point
Even once the decision has been made to pursue
a career in finance, landing that first role is
becoming increasingly difficult. As financial institutions
face ever tighter margins, new hires
60 December 2016

and training programmes are often the first to
be impacted by cost cutting programmes.
Additionally for employers, during strong periods
of growth the most talented are lured overseas
attracted by the excitement of a different
environment, whilst the outflow are not necessarily
met by an equal inflow of the strongest
contenders from overseas.
Government subsidised, or even fully funded,
work placement programmes can provide a
much needed incentive for the private sector
to “buy local” and develop talent. Such programmes
can also often provide an alternative
route for school leavers, allowing them to
choose and start a rewarding, and paid career,
at an earlier age.
There are also examples of employers engaging
with graduates at a much earlier stage than
before. Over the last five years, banks in the UK
have created a well-structured system of intern
placement schemes for university students in
their last year summer vacation. Enabling both
sides of the relationship to “try before they buy”
and helping graduates to make well informed
decisions in their careers, often resulting in the
development of a strong talent base and lower
levels of staff turnover.
Training and competence frameworks
Education is a life-long journey and like many
other professions (medicine, accountancy
and law) the sector needs to instil a clear and
well-defined framework for professional development
to ensure that financiers are trusted
by investors and more broadly, the long-term
health of financial institutions and ultimately,
the health and sustainability of economies
around the world.
Most of us would be horrified if our doctor, to
whom we entrust our health, had not undertaken
rigorous professional development since
qualifying 20 years ago; and yet for many in
finance, to whom we entrust our wealth, there
are few requirements for a professional qualification
or on-going education.
Training and competence frameworks can come
in many shapes and forms; from very specific
listed requirements for each role, through to a
broader obligation on the employer to demonstrate
they have taken the necessary steps to
educate their staff. Although the needs of every
market is different and may vary over time,
achieving a balance of clear direction whilst allowing
flexibility for the employer and employee
works well.
Surely one lesson learnt from 2008 and the
painful years that followed was that it doesn’t
matter how big the banks are or how innovative
their product range, without the trust of investors
and the market more broadly they will not
survive. The creation of a well-defined training
and competency framework will go a long way
to recognising the financial sector as a trusted
profession, which requires commitment and
learning from its employees.
Think global
“A sustainable economy must
be able to grow and educate the
talent it will need in the future”.
Whilst many of the points above have been focused
on the home state, it is important to stress
the need to think globally and engage in international
initiatives.
Including globally recognised qualifications
in both funding programmes and training and
competence frameworks can help to attract
overseas investment while also allowing transportability
of talent.
For example, the CFA Program® - whilst originally
founded in the United States - now has
significantly more candidates from the MEA region
and Asia than the United States. The standardised
curriculum and exam around the world
creates a global benchmark of knowledge for investors
and employers alike. Many other leading
examining bodies are also becoming more global,
for example the CISI (Chartered Institute for
Securities & Investment) now delivering exams
globally and in multiple languages.
Importing education providers from more developed
markets to deliver more advanced programmes
can also help accelerate the development
of talent and avoid the risk of losing them
to overseas markets to study.
So as we consider what the next 10 years may
bring for global capital markets, we should not
underestimate the impact that a strong education
infrastructure, not just aimed at seasoned
financial professionals but rather embedded in
a country’s education system and society, can
have in enabling the development of a robust
financial services sector.
1.”Top Banks in the World 2015” - relbanks.com. 2015
Mauritius International Financial Centre
61

CAPACITY BUILDING
“We will also offer a number of
technical courses, like captive
insurance, commodities and
derivatives exchange, stock
exchange, with a view to making
our graduates employable.”
62 December 2016

MOHAMED KHAN, DIRECTOR OF THE FINANCIAL SERVICES INSTITUTE:
“We want FSI to be
a demand-driven
training Institution”
Mohamed Khan, Director of the Financial Services Institute (FSI), explains how
the newly setup organisation will open new vistas of employment opportunities
for the young graduates with the new financial product offerings and services
that are being developed in the financial eco-system of Mauritius. The Financial
Services Institute is a key department of the Financial Services Promotion Agency.
What is the objective of the Financial Services Institute?
The Financial Services Institute (FSI) is a new government initiative
whose primary objective is to look at the upskilling our
unemployed graduates. We are essentially trying to bridge the
gap between the university and the workplace. Universities are
all about theoretical concepts and the FSI will develop and design
bespoke courses which will have this knowledge transfer
whereby the theoretical concepts are now transferred into the
workplace. So, we are to have a range of courses which will also
include soft skills, communication skills and also skills to navigate
the corporate world. We will also offer a number of technical
courses, like captive insurance, commodities and derivatives
exchange, stock exchange, with a view to making our graduates
employable.
What is the strategy of the Financial Services Institute
to address the issue of skills mismatch in the Financial
Services Sector?
Indeed, I think there is a skills mismatch. You’ve got people who
have done agricultural sciences, geography, business studies at
university and we are looking to make these graduates employable
in the financial services sector. For example, someone who
has done a degree in agricultural sciences can now work in the
banking industry. As I alluded to previously, the FSI will design
bespoke courses which will make them employable in the financial
services sector. Before we design these courses, we will engage
with operators and gather intelligence to find out exactly
what their requirements are. We must bear in mind that they are
graduates and they know how to think and research, etc. As such,
it should not be too difficult to get these graduates up to the required
standard so that they discharge their duties with due skill
and care and to the satisfaction of their employers.
In terms of the new financial services product offerings
announced in the 2016/2017 budget, what will be role
of FSI in regards to these budgetary measures?
As we are aware, the government has announced a number of
new products such as investment banking, captive insurance,
trading in commodities and derivatives to name a few. So, what
the FSI can do about that? The FSI is not about supply-driven
courses, it is about demand-driven courses. If for instance an investment
banking company is established in Mauritius, we will
find out what degree of expertise it requires and we will accordingly
adapt our courses to suit the requirement. After their courses,
our graduates will be desk-ready for a job in the investment if
we pursue that analogy.
What are the upcoming Initiatives of the FSI?
Well in the first question I answered as to what is the primary
strategic area for development which is to make our young graduates
employable. After we have achieved this objective in part
or in whole we will then move on to the next phase of our strategy
which will be promoting financial literacy and more competency-based
trainings. Thereafter, we can reach out to take the
FSI to our African brothers and sisters. I think that with our level
of expertise it is not beyond the realms of possibility that in a
couple of years we may become involved with Africa and seek to
meet the training requirements of their companies.
Mauritius International Financial Centre
63

CAPITAL MARKET
Mauritius at the starting
block for moving up
the value chain
Mauritius has all the right ingredients and DNA to position itself as an International
Financial Centre (IFC) of substance. The latter was far too commonly used that
we tend to lose track of how Mauritius can jump-start its IFC amid the dawn
of a new era with the erosion of DTAA-driven competitive advantage.
By Rajiv Lutchmiah, co-founder
and CEO of LCF Securities Ltd
Beyond the good governance, investor
protection, well developed banking
services and double-taxation avoidance
treaties, Mauritius has an edge
over many African /regional peers as it is white
listed OECD, highly regulated and adopted first
world regulatory framework, FATCA, CRS and
MiFID compliant as well as the Mauritius Stock
Exchange being HMRC approved.
Mauritius has all the right legal and regulatory
framework to offer value-added services to
move up the value chain in the financial services
sector. Mauritian Offshore Management
Companies (OMCs) and financial services providers
need to look beyond traditional avenues
of growth, such as low value administration
of companies under DTAA, and use its legal,
banking and regulatory framework to capture
business within the investment administration,
wealth management and security brokerage.
Untapping the Mauritius advantage for a
IFC of substance
Mauritius has several advantages that remain
untapped. What was seen as an initial regulatory
burden and compliance costs to financial services
firms can be used for adding substance to the
Mauritius International Financial Centre by leveraging
on both inbound and outbound investments.
Some avenues for growth and value creation
that can be explored are:
• listing of African funds and Indian loan notes
and debentures on the Stock Exchange of
Mauritius (SEM)
• showcasing the advantage for UK pension
funds using such SEM-listed instruments for
HRMC’s approved investment savings accounts,
pension schemes and other vehicles.
• tapping a vast market whereby financial firms
from non-white listed OECD African have limited
access to financial services and banking
facilities in major financial centres such as London/
Geneva. Mauritius can become a platform
to Africa by offering its banking, wealth management
and brokerage services by connecting
Africa to major markets. One such example
is an investment broker providing a gateway to
some African firms to use its investment platform
to invest in Global stock markets, while
the clients hold securities and cash accounts
in Mauritius.
• Mauritius IFC operators should develop business
and strategies to capitalize on the time
zone advantage of Mauritius and mounting
costs of Dubai and Singapore IFCs. There is
significant value to be tapped by OMCs and
financial services firms by providing enhanced
services to their existing clients or offering
outsourcing solutions to other firms/OMCs
based in more expensive jurisdictions. Such
enhanced services could include investment
reporting, fund analytics, business intelligence
information, financial data capture services,
trade confirmations and settlement instructions
processing. One example is how an investment
firm leveraged its relationship with
one of its clients to centralize the reporting of
trades executed in Singapore, Japan and India.
The time-zone advantage of Mauritius helped
to provide managers based in London and US
64 December 2016

Mauritius International Financial Centre
65

CAPITAL MARKET MAURITIUS AT THE STARTING BLOCK FOR MOVING UP THE VALUE CHAIN
reports sometimes even before their morning
coffee.
• Government assistance should also be sought
to encourage harmonization of licensing of
securities and financial services firm within
the SADC and PTA member countries. Similar
to Europe, there should be a framework that
would allow regulated financial services firms
to operate in member countries through a system
of “passport” whereby a wealth management
firm in Mauritius can operate in Kenya
when it is sponsored by a Kenyan firm.
• There is a niche market to be tapped which is
the management and administration of pension
business. With rising operating costs in
Malta, Gibaltar, Singapore and Dubai, Mauritius
can compete for the business of expats-centric
pension business, life insurance wrappers
and Qualifying Recognised Overseas Pension
Schemes (QROPS). The recent establishment of
Mauritius IFC would help to converge efforts of
different parties – OMCs, Banks, Wealth managers,
Fund administrators, Insurance companies
and investment brokers to offer a holistic offering
to compete with IFCs with mounting costs
of operations such as Dubai, Singapore, Gibraltar,
Ireland and Luxemburg. LCF has teamed up
with UK and Dubai counterparts to kick start an
investment platform for expat-market for the
African and Asian market.
• Mauritius could position itself as a leading
centre for the registration of “intellectual property”,
“trademarks” and “patents” as the world
becomes more knowledge based and the value
of patents and IP is growing both in value
and also as a percentage of company capitalization.
Mauritius could use example of the
UK’s Intellectual Property Office as UK is used a
hub for global companies to use UK as a home
for their IP, patents and trademarks. Mauritius
should provide appropriate legislations and reduce
red tape similar to UK’s “Intellectual Property
Act” which allow companies to manage
online their intellectual property and reducing
their overall costs. This step is important to encourage
businesses, scholars and also regional
businesses operating in volatile and uncertain
environment to register and protect their IP in
Mauritius.
The starting block
The scaling up of Mauritian financial services
firm can only take place through an outward oriented
strategy with a fresh view of the competitive
landscape. Such a strategy should shift from
“The sustainable growth path for
the Mauritius IFC sector could only
be achieved through investment
in human capital and technology.
In the new internet era of
cloud computing and software
as a service, the “hardware”
is accessible and affordable
in such way that there is
a level-playing field.”
DTAA-dependent to one being client-centric
and value enhancing for its end clients and
developing business partnership with other
IFCs, such as offering outsourcing solutions
to OMCs based in Jersey or Dubai. This would
also help in the transfer of knowledge and
technology to Mauritian enterprises.
The sustainable growth path for the Mauritius
IFC sector could only be achieved through investment
in Human Capital (the software) and
technology (the hardware). In the new internet
era of cloud computing and software as a service,
the “hardware” is accessible and affordable
in such way that there is a level-playing
field. However, the key remains the constant
nurturing of talents and improving the human
capital of Mauritian enterprises. Companies
such as MCB and Lux Resorts have
demonstrated how ongoing focus on its most
valuable human capital resource paved way
for improved competiveness, coupled with
higher growth and profitability than their respective
peers.
The future is remains bright for entrepreneurs
and business leaders ready to develop a new
spring board of growth, which is built on their
past successes. Collaboration among different
actors of the financial services scene will be
key to be able to offer a comprehensive solution
to propel Mauritius up the value chain
and to become a reputable and competitive
IFC at global level.
66 December 2016

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