Mauritius needs to change focus in terms of more tangible and real investments to be the financial hub of Africa.
Mauritius plans to launch a trading platform to hedge African currencies against the U.S. dollar, part of a bid to expand its role as a financial hub for the continent. Alongside there are talks to boost ties with stock exchanges in Johannesburg and Nairobi to encourage cross-listing of shares and other areas of cooperation.
Mauritius is in talks to boost ties with stock exchanges in Johannesburg and Nairobi to encourage cross-listing of shares and other areas of cooperation.
The focus has to change in terms of more tangible, real investments which are taking place in Mauritius
The international financial services sector in Mauritius has relied heavily on dealings with India, helped by a double taxation avoidance treaty that made the island the biggest route for foreign investment into India.
But that could be hit if talks with India lead to treaty changes, encouraging a shift in focus to Africa where officials see a chance to offer a broader range of financial services and shake off criticism that Mauritius is little more than a “tax haven”.
Mauritius has to move to the next level which is bringing real investments which are creating jobs in Mauritius and for to be the platform for Africa for the right reasons.
Mauritius had signed a memorandum of understanding with National Stock Exchange of India, aimed at encouraging cross-listing of Indian firms and helping the island become a route for investment to Africa from India and elsewhere.
One of the aspects is for the creation of a new currency derivatives platform, where African currencies can be hedged against the U.S. dollar for which the launch was expected in 2016.
Mauritius was working with South Africa on encouraging cross-listings and was holding talks on the same issue with Kenya and in this Mauritius has signed a memorandum with Dubai financial markets to help develop markets in Mauritius.
In terms of global business, one of the things the country is moving more towards front-office activity and regional headquartering, where insurance firms are among those interested in using Mauritius as a base.
To benefit from the double tax avoidance treaties Mauritius has with African states, companies have to meet a range of requirements, such as having at least two resident directors and using Mauritius accounts for related banking transactions.
But critics say such firms, known as Global Business Company 1s (GBC1s), should face tougher demands to benefit from the treaties, so they can show more clearly that they are not using Mauritius solely to avoid higher taxes elsewhere. GBC1s pay a maximum 3% corporate tax and no capital gains tax.
Some regulations related to the sector could be changed, possibly by the end of the year, he said, although he added that he was working closely with the 138 or so management firms that handle the roughly 10,000 GBC1s registered on the island.