Financial ExpertSpeak: Mauritius a victim of own success; tough to change economic narrative from tourism
Samantha Seewoosurrun, a professional consultant in the Financial Services sector, spoke to AfricaMoney on how there is a great deal of competition to become the pre-eminent International Financial Centre within Africa; also, Mauritius may be a victim of its own success, with its tourism marketing being so effective and far-reaching that it is now a challenge to change the narrative.(Image:Company)
Edited excerpts from an exclusive interview:
How do you view Mauritius as an International Financial Centre (IFC)? Would you say we have the necessary resources and infrastructure to be an IFC?
I believe that Mauritius has strong potential to develop its offerings as an emerging International Financial Centre (IFC) and to build recognition of its presence on the international stage.
There is undoubtedly a great deal of competition to become the pre-eminent IFC even within Africa, with South Africa currently being top of the class. Kenya, Ghana, Botswana and Rwanda are seeking to position themselves next, with Morocco playing catch up.
In terms of necessary resources and infrastructure, the Mauritius IFC has already taken huge strides forward over the last 20 years, and, with the right kind of products and services, the island economy can surely move from strength to strength in the years to come.
Can you please provide us with your views on how foreigners are likely to perceive Mauritius as an IFC?
I have undertaken research across a range of jurisdictions, including Africa, Europe, Australia and the Far East, and was surprised to find that there was actually very little knowledge or understanding of Mauritius as an IFC. Most of the people that my colleagues and I contacted – ranging from investors in Africa, to politicians and officials in Europe, to newspaper editors in the Far East – predominantly perceived Mauritius as a luxury tourist destination, and it was news to them that Mauritius is an IFC at all.
Thus, Mauritius is, in some respects, a victim of its own success, in that its tourism marketing has been so effective and far-reaching, that it is now a challenge to change the narrative.
What is the best way to promote brand Mauritius as an IFC?
I would suggest that the financial services sector of Mauritius, working together with the government, needs to identify and promote its key messages. I believe that these should focus on the added value that the Mauritius IFC can bring to its clients, with a culture of good governance and ease of doing business.
It is important that the IFC is not considered an end in itself, but that it has a wider meaning or role, which could be to build value and drive growth both in Mauritius and the region. We also need real examples or case studies of what Mauritius has contributed to, for example, through private equity deals in Africa.
The transformation of Brand Mauritius to an IFC will not happen overnight, and it will take sustained efforts by both government and industry. In this context, it is a very positive development that the Financial Services Promotion Agency is being re-activated. In terms of the starting point, I would suggest that increasing visibility of the sector will be crucial, because people first need to know that an IFC exists before they can be expected to take an interest in it.
In the financial services segment, which area is of most interest to foreign investors?
A number of potential foreign investors I spoke to about Mauritius, in different parts of the world, were completely unaware of the products and services offered by the Mauritius IFC, so in order to attract investors it will be important to articulate what is available.
In terms of those with some knowledge of Mauritius, my understanding is that investment products, investment funds and private equity could be attractive, particularly at a time when regulations on investment funds are becoming more restrictive in some other parts of the world.
How are foreigners reacting to the recent financial scandal in Mauritius? Are they wary of placing their trust in the island economy?
The recent financial scandal has had a significant impact upon the confidence of those who had already invested or were otherwise involved in Mauritius. Within weeks of the scandal breaking, I heard from key players in the Mauritius financial sector that investors were pulling out, accounts were being closed and potential market entrants were cancelling their plans. This clearly indicated a crisis of confidence and trust in the system which urgently needed to be addressed.
In terms of wider interest, media coverage of the scandal was actually relatively limited, since there are few international correspondents in Mauritius, which meant there was not the widespread coverage across the globe that there could have been if Mauritius was better known.
What can be done, in your opinion, to reinstate trust in the financial services sector in Mauritius?
I think potential foreign investors will be looking to the government and regulatory authorities to ensure that the right corrective actions have been taken to ensure that the crisis is contained as far as possible and that there is no risk of a ‘spillover effect’ in relation to other institutions. If that can be proved to be the case, and there are no further casualties within the next few months, then I think trust will gradually be rebuilt.
In terms of regulatory framework for IFCs, is there any specific regulation that shall promote the country further, if proactively adopted by the authorities?
There has been a huge amount of financial services regulation introduced in many jurisdictions over the past few years in response to the global financial crisis. My own view, if I look at Europe in particular, is that if you ‘legislate in haste, you will repent at leisure’. The European Commission has itself admitted in recent weeks that some legislation on capital requirements is actually limiting the funds available to the wider economy, in clear contradiction with its own economic goals.
There are significant changes being made by the regulatory authorities in Mauritius. I would suggest that, now that the crisis is over and immediate remedial actions have been taken, it is time for quiet reflection and objective assessment of how the regulatory and policy framework of Mauritius stands up to international scrutiny, and how it should be positioned or amended in order to attract investors.
Finally, is there any country Mauritius can look up to as a role model, to enhance its credibility as an IFC?
If I would offer a couple of international comparators, Singapore has been an incredible success story for many years. But, there are some signs now that its star is beginning to wane, with capital markets being relatively quiet recently and industry players urging the regulators to introduce policies to stimulate new trading activity.
Dubai has also seen phenomenal growth in recent years, but it is unable to offer a democratic framework, or even legal certainty in case of disputes, while Mauritius is able to claim a robust legal environment and a fast emerging International Arbitration Centre.
Overall, I am not sure if Mauritius even needs a role model. I believe it provides a unique offer to the world in view of its geographical positioning, strategic time zone and bilingual personnel, amongst many other compelling selling points. I think the financial services sector of Mauritius is growing and developing in the right direction. I would say that the time has now come for the key players to go out into the world, on the front foot, and tell people that Mauritius is a real economic success story which is building value and driving growth, and that the emerging IFC is a critical component of it.
- By Wazna Gunga