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AfricaMoney | August 24, 2017

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Economic ExpertSpeak: Africa is the next business frontier & Mauritius the gateway

Economic ExpertSpeak: Africa is the next business frontier & Mauritius the gateway

AfricaMoney spoke to the dynamic Clensy Appavoo, founder of the Mauritius-based consulting major, the Appavoo group, on what makes Africa the next business frontier and how Mauritius is well placed to serve as a gateway to the emerging continent. (Image: Cecilia Samoisi)

Clensy Appavoo, founder of the Appavoo group, spoke to AfricaMoney on how Mauritius is shaping up as an international financial centre of global reckoning. He noted that by 2050, at least one or two African countries are going to be among the biggest economies of the world, and Mauritius was well-positioned to help investors and private equity players gain access to this land of opportunities. He also shared his thoughts on how Mauritius must innovate to stay relevant in the global context.

Edited excerpts from an exclusive interview:

How does Appavoo Group set about achieving its vision: “Achieve leadership position based on a reputation for excellence in the provision of services in the field of Finance, Management and Development”?

Appavoo Group has been set up 25 years ago in 1989. It started as a small firm and over the years, it has built up into a sizeable firm in Mauritius and the region. Today, it is structured with some 12 companies as subsidiaries and each one of them undertakes highly specialised work in terms of client services. Our approach is really to add value to client services and we do not operate as traditional accountants who only prepare accounts. We are much more in the nature of advisors to the business community. As an accountancy firm which also serves as an advisor, we provide related services such as audit as well, and then we get a lot of consultancy work besides. We are also structured to provide offshore administration for companies, which invest in the region in the offshore sector, or what we call the international financial centre of Mauritius, whereby we set up global companies for clients. We also run a business school, among others; we have a recruitment agency and an array of client-facing services, which are very important for the business community. Our vision has been developed in line with the development of the whole economy of Mauritius. We found opportunities to develop services to respond to client demand when in 1992 the global business sector was set up, so we immediately set up an offshore management company, which is called Appavoo International Limited, and has been servicing global businesses ever since 1996. Over the years, as education started to be a sector of focus in Mauritius, we set up a school in 2003 to provide corporate education. Over the years, we have developed our services in line with country’s development and we feel today that we are one of the sizeable and important firms within the configuration of consultancy firms in Mauritius. And of course, we are growing along with the country and the region. Today, we believe strongly in the Africa growth story and are going to gear our strategies to develop business in Africa.

This year Appavoo Group celebrated its 25th anniversary. What are the milestones of the group during its 25 years of existence? Were there any obstacles faced in the way?

In 25 years, we have reengineered the group by constantly asking ourselves the question “What more we can do for our clients?” and of course, this has brought us along to develop new services for new target clients. When we look back at this journey of 25 years, we find that it seems to be a long period of time for the existence of an enterprise. But, to us it seems that it has been just a few years since we started our business because things are going so fast and so successfully for us that we are truly proud today to be at the service of the business community and to have realised the basic mission that we set ourselves. Now, we are going on to the second phase of the organisation’s development and hope to achieve that within the next 25 years. There have been a lot of obstacles in the way of our growth because Mauritius is a small island with a small market and when we entered into the consultancy field in 1989, there were already large firms that were present in the market. So, in a small, competitive market, when you enter as a small firm, of course it is a tremendous challenge in to get into it. Yes, there have been a lot of difficulties but I think, along with my other employees, we had a good vision to develop the business and we have implemented it exceedingly well.

Recently, HLB Appavoo & Associates organised a five-day conference at Le Touessrok Resort, which was the first African conference for HLB International. What was the purpose behind this conference?

This is the first time that HLB organised a conference in Mauritius. Just to say a few words on HLB, it is our international network based in London and present in 130 countries, which has more than 14,000 employees and 1,200 partners across the world today. It is a sizeable network and operates around the world, setting up in regional zones for its development. Around three to four years ago we targeted the regional zone called the Middle East & Africa (MEA) bloc. The MEA encloses all the countries starting from Israel, the West Bank, coming down to all the countries within the Middle East and the whole of the African continent including the islands of the Indian Ocean region. So, we were very proud, and very blessed at the same time, that HLB international has chosen Mauritius as the host country to organize the conference. Everybody is looking at Africa as the financial frontier and we too at HLB are conscious of this as we are well aware that Africa represents a land of opportunities and investments. Coming back to the conference, there were attendees from London, USA, Australia and China. From across the world, there were some 30 countries which were represented at the conference. The aim was to rethink the strategy of HLB International for Africa and the Middle East. This gave us the opportunity over the five days of the conference to get important guest speakers coming through and to explain the use of Mauritius as an important route of investments into Africa. At the same time, we put into perspective the different African countries where we feel growth is coming in very quickly. Now, HLB has got some 40 countries where it is present within Africa and the Middle East and today, we have more than 100 partners which are in charge of the development of this network. Together with these people, we developed a business plan for HLB International with focus on the Middle East and Africa region.

Also, at the conference, you launched a software comprising of a management system for company information. Please tell us more about this software.

This is an enterprise information management software, which is called FILERO. The Germans developed this software, which uses a very intelligent access and development concept. This software uses cache memory, which is a new technology and has got its roots in America. It enables enterprises to undertake effective management of information, and at the same time, it provides an electronic archive of documents. Nowadays, the business world always talks about becoming paperless, but more and more, we find the paradox emerging that the more people make use of computers, the more paper that gets generated. FILERO, the enterprise information management system, provides two things: a platform whereby all papers can be transformed into their electronic version, and at the same time, this information can be made available at anytime, such that it can also be incorporated in simple apps that are going to be developed for mobile phones. FILERO is the new technology we are bringing in and forms part of the offerings which we are prioritising in the coming year for the whole business community. This offering is going to be important for different types of businesses whether it is law firms, accountancy firms, offshore management companies, banks or even the government or universities. All enterprises will need to digitise the processes they have and the documents with which they are working. This software is going to bring in two important dimensions to businesses. First of all, it will allow people to manage information on a digital platform, meaning that they will no longer need to handle hard copies. Secondly, it will provide for the electronic archiving of documents. For the development and the application of this software we are talking to people to develop what we call industrial archives, whereby this would be a compliment to our digitalization of documents, and are also in talks with people to set up digitalized warehouses providing for secure, physical transfer of data. We are going to ask enterprises to get rid of their physical archives in a way, as everything will be digitalised on the computer, and they can get access to them easily, but papers will go in a different physical warehouse where specialists in archiving will keep them and whenever the documents are needed, these specialists will bring them. This will allow the business community a competitive edge in terms of access to information and management of information, such that they get easy and immediate access to business data whenever they are.

Nowadays, there is a lot of talk about integrated reporting. In what ways do you think integrated reporting can help accountants, given the increasing focus on sustainable businesses? 

We always talk about the triple bottom line in business. We no longer now look at business as a profit-making entity alone because a business is not just here to make profits. The two important objectives of businesses are firstly, to make profits because people put in their money as investment and as compensation, they expect a return on their investment. The second objective is to create an environment where everything done is environmentally friendly. Organisations have the responsibility to ensure that whenever is done in business, does not end up damaging the environment alongside. For example, what we are bringing with our software FILERO fits in exactly with the achievement of this objective, because we are telling businesses to use less papers. Also, there cannot be sustainable development if there is no social integration and businesses today simply must integrate with society. We ourselves know that there are a lot of people who are diabetics in Mauritius, and since last year we have been sponsoring and doing things with T1 Diams, which is an NGO that helps diabetic children. Corporate social responsibility is a good process that the government has focused on over the last three years. It obliges corporations to not only do business to make profit but also to look at the greater good of society by putting a percentage of their profit into a fund, either a foundation or a specific CSR fund. This money is supposed to help people who are really in need — in dealing with HIV, housing schemes, poverty alleviation and such CSR programs. So these are, what we call, the integrated concept of business management and integrated concept of reporting. Today, businesses have to report not only on profits but also on corporate governance, covering what they have done for society and the extent to which they respect the environment.

How do you find the situation of the labour market in Mauritius? How does labour outsourcing work in Mauritius and what are your views on this concept?

First of all, we have got 550,000 people who make up our labour force in Mauritius. Labour is very diversified in different industries but I am quite concerned by two issues. We have got an unemployment rate of around 8% and this unemployment rate is still greater in two categories of employees. First of all, among the young people coming out from school – the young graduates and youngsters – the unemployment rate exceeds 25%. This is very alarming. Secondly, the rate of unemployment among women goes up to around 13%. These are reasons for concern in our small economy because there is a huge disparity between the haves and have-notes, and since two years, there has been no or minimal investment from the private sector. Foreign Direct Investment is not as we have been expecting, although Mauritius has achieved a good growth rate. We have a long way to go to deal with labour issues. Young people are facing unemployment and if we do not deal with it quickly, it will lead to other social problems. On female unemployment, as our population of women exceeds that of men, this disparity is becoming more and more evident. Despite the prevalent unemployment in Mauritius, we still need to bring in foreign expertise and foreign labour as in certain sectors we do not have the required labour and we need to import labour. We hope that over the years, the problem of unemployment will ease but, as of now, we must go to the root of the education system in order to ensure a beneficial impact on the world of work. Still, I do think that efforts are being made and we hope that soon we are going to get a new government that is going to bring in new solutions to these old problems.

The Group assisted quite a few local companies in business development and in international negotiations. Are there many companies targeting the Africa continent for investment?

Definitely! As I said, Africa represents the last business frontier. In 2050, we expect that at least one or two African countries are going to be among the biggest economies of the world. Nigeria is definitely going to be there, and at the same time, there is a lot of development happening in Africa and lot of countries are looking into Africa as the place where they should be — because this is where developments are going to be. I can tell you that China is probably one of the first countries to be present in Africa in different sectors, but essentially in mining. The Australians are also very much present in Africa, and now we are going to get many countries here which are already looking at Africa as the place for investments. There are big names which are already present, there are institutions which are going right into Africa, and private equity players who are taking stakes there. Within our firm, we set up the HLB Investment desk, which is handled by a small team in our office, and it links up with our offices and member firms in Beijing and Shanghai where we get private equities and others looking for opportunities to invest into Africa. We are channeling them to use Mauritius as the ideal route for investments into Africa. Going through Mauritius, it is important that Mauritian operators or business people do not work in isolation but provide a complete, end-to-end offering. There is a multitude of services that can be brought together in order to make things happen. And this is our vision on how we look at investment into Africa. At the same time, we have to think about partners who exist in Africa, meaning the business people who are potential partners to work with us. This is our philosophy and this should be the philosophy of all businesses which want to invest into Africa.

Finally, please provide your views on the way forward for the Mauritian economy?

On the Mauritian economy, we hear a lot of promises as we approach the time of the elections. I think that the objective for the incoming government is essentially to make Mauritius take its place in the league of high-income countries. This is a very laudable and ambitious objective and I fully subscribe to it as a simple businessman in Mauritius. Actually, we have a growth rate of around 3% and we know that in some sectors we have reached a peak of growth, and the life cycle of certain industries has already reached the climax, meaning that we are going on the downside of the growth curve now, if we do not do something to go up the curve again. In business, it is usually what we call the ‘S curve’, which means that when you go up, you finally reach a climax and then you start to fall – but you can go up again by finding a solution that is innovative. Your graph will then continue to move upwards. And this should be the picture that Mauritius has to fix for itself in the different sectors of the economy. Today, we have reached the climax for sugar, for instance. Forty years ago, the sugar industry was the number one industry and now it contributes less than 2% to our GDP. We find that there are other sectors which have come up, such as offshore, ICT and new pillars such as the ocean economy. Personally I believe in the ocean economy as our firm has done a lot of studies on fisheries development, fish preservation for the United Nations and all the international agencies. Unfortunately over the years, we have not seen the will power from the government in order to push the industry forward, but the last budget has put in place certain aspects which will help develop the ocean economy, so these are the areas which must be developed. There are more ideas that must come in, and people are already talking about making Mauritius a business hub for education and medical services. Also, there must be a long term vision of how to develop the usage of land which is available in Mauritius.

Of course our firm is a small firm compared to the size of the economy of Mauritius, but we are here to contribute our ideas and we feel that it is possible to make Mauritius a high-income country. We can do it by putting our minds together to ensure development such that Mauritius continues to be an important economy and a land of fresh opportunities.

- By Marie-Lorry Coret

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