Financial ExpertSpeak: Mauritius must reinvent itself in new investment climate
Richard Arlove, CEO of ABAX, spoke to AfricaMoney on how Mauritius must reinvent itself as an international financial centre primarily focused towards people investing and doing business in Africa and, also, at the same time, continue to be a financial centre for selected countries in Asia. (Image: Kashish Jadoo)
Richard Arlove is the CEO of ABAX, an international provider of integrated corporate, business and advisory services for private equity funds, multinational corporations, entrepreneurs and high net worth individuals doing business in Africa, Asia and the Middle East. The range of services offered by ABAX include business structuring, enterprise value optimisation, corporate finance advisory, corporate management, fund administration, private wealth administration and fiduciary services. ABAX administers USD 20 billion of client assets.
Richard is a board member of several international companies and private equity funds investing in Africa and Asia. He is a regular speaker in international forums with regards to investments in Africa. He is a Fellow member of the Association of Chartered Certified Accountants in UK.
Edited excerpts from an exclusive interview with AfricaMoney:
What are the challenges that Mauritius faces as an International Financial Centre and how can they be addressed?
I think that, as a financial centre, Mauritius must reinvent itself because the financial sector has developed over the last 20 years when the financial investment environment was different. Today, we need to see the financial services sector as a sector primarily focused towards people investing and doing business in Africa and, also, at the same time, continue to be a financial centre for selected countries in Asia. Therefore we need to reinvent ourselves and focus on the elements which are not necessarily tax-driven. So Mauritius must be able to provide real substance and value-add to companies that want to invest in Mauritius.
The challenge that we have in Mauritius is that all the resources that we need to be able to provide these services are essentially human. So these human resources must be up-skilled, and we must also boost the infrastructure and environment. We need to continue working on the “ease of doing business” and to improve the business environment in Mauritius. We also need to work towards lowering the cost of business, attracting financial services multinationals and fund managers to come, live and work in Mauritius, and not only do business through Mauritius. The focus, in fact, is to do business from Mauritius, not through Mauritius.
The financial services sector is one of the most prominent sectors of the island economy, contributing over 10% to the GDP. How, apart from the low-cost jurisdiction status, can Mauritius best position its financial services sector to global investors?
Mauritius is part of Africa and this is a fact that is not sufficiently known — and, at the same time, we are geographically and culturally quite close to Asia as well. Our promotion from a financial centre perspective has not been done sufficiently in the past. So we definitely need communicate effectively on who we are and the real value that we provide. And this value today is not necessarily linked to the fact that we are a low-tax jurisdiction or low-cost jurisdiction.
It is more about an eco-system that we have created and nurtured which is made up of a combination of advantages. These advantages include, among others, the fact that we are a country belonging to African regional institutions, we are bilingual, we have a talent pool of professionals in legal and financial services and we have international banks settled here providing world class services. We are also able to provide supporting infrastructure in terms of ICT, BPO, real estate and other facilities, which are such that multinationals can have their regional headquarters domiciled in Mauritius, and conduct business easily into Africa from here.
The Mauritian government is intensifying its efforts to provide support to investors to tap into the African continent. In your opinion, what are some key investment opportunities in Africa that Mauritius can help investors to home in on?
I think Mauritius can act as a major facilitator in helping investors make their decisions to go into specific African countries and regions. Over the years, Mauritius has played that role for India. More than 35% of the Foreign Direct Investment into India is structured in Mauritius. We are seeing the same trend where Mauritius is helping FDI into Africa. When an investor decides to invest in an African country or across Africa, very often they will look at the risk of investment, for example one risk that we may face is different laws being applied in different countries, one country speaking English and the other one French, the fact that there are exchange controls in different countries which means that if your money and your profits are in a specific country or in a number of countries, how do you access it as shareholder; and also, there are places where the tax-regimes and rates can be different.
The assistance that Mauritius can provide for investments into Africa is not sector specific but it is generally aimed at mitigating a number of risks which the investor faces, and can partly be mitigated by having one central platform in Mauritius from which to invest into Africa.
Abax specializes in business solutions to multinationals and private equity funds investing in Africa and Asia. Can you comment on your main achievements in 2014?
I think the main achievements are linked to helping the entrepreneurial spirit of Africa to unleash and to develop. We are seeing, and we have seen for the past few years, an important emergence of entrepreneurs, many of whom have developed their own intellectual property, from African countries. Last week, we had over at our office an entrepreneur from a Central African country, who is the first person who has developed tablets in Africa. It’s African technology, for the African people. Three weeks ago, we met people who have developed a new technology for providing micro-credit loans to people over their mobiles. And these people have a 100 million strong subscriber base and they are going to sell their products in Asia where they are targeting 500 million subscribers. That’s African technology for people across the world!
And when you speak to these entrepreneurs, you realize that they need to be focussing on their business. But then, who will protect their intellectual property? Who can make sure that their profit is going to be efficiently taken care of, and that they can remit profits from different countries in which they are operating to be distributed to their shareholders and their employees? Who looks after the legal regulations concerning different employees being employed in different countries? Who is going to take care of the value of the enterprise and how do they make sure that when the company is going to be listed on the stock exchange, it is going to deliver the highest value to its shareholders? Now, for those shareholders, who is going to take care of advising them on remitting their capital gains in the best manner? This is the service that we provide.
So when you ask me about the achievements of Abax in 2014, our story is really about helping African entrepreneurs to think through the process of investments and operations and optimising enterprise value and shareholder value. Our challenges and opportunities are really to see how financial services can be linked with ICT, and deliver financial value in the process of rendering technology.
Recently Abax engaged in the fight against Ebola in West Africa and terrorism in Nigeria. What are other CSR initiatives undertaken by Abax across Mauritius and the African mainland?
Our CSR activities have been focused on education in Mauritius. So we centre our CSR activities around supporting students who have failed CPE and also in helping needy families to have access to education by assisting in the construction of dedicated schools. Also, we try to ensure that our staff are committed to our CSR activities, such that it is not only a question of providing money but also about going out and helping on the ground.
As far as Africa is concerned, Ebola was an example where we thought we have a responsibility as a company that works with the continent. Here in Mauritius, we most certainly are part of the continent, and have a responsibility to make Mauritians aware of Ebola and how can we help.
Finally, what are you expecting from the upcoming budget from a financial services perspective?
I think we are yet to see how the new Ministry of Financial Services is going to be empowered. For instance, is it going to work closely with the Ministry of Finance and the Ministry of Foreign Affairs, because these three Ministries need to work very closely together to reshape our financial services industry and be effective internationally. So I would like to see that the budget will provide funds to the new Ministry of Financial Services for consolidating, reshaping and promoting Mauritius as an international financial centre; that funds be allocated to the Ministry of Foreign Affairs in order to truly achieve Economic Diplomacy in Africa, with embassies that have people understanding clearly our financial services industry and how Mauritius can be used as a platform for doing business in Africa and Asia.
I would like to see that there is a clear message that the Financial Services Industry can be the major enabler to develop other industries, integrating the global business sector with the domestic economy to really reap benefits of these global business companies who have shown confidence in our country, what value and substance can we get from them for our country. This integration between the global business and the domestic economy will enable us to become that high income economy that we want to be.
- By Kashish Jadoo