South Africa and Zimbabwe firms zoom in on Mauritius
Some of the unique elements that makes Mauritius an attractive and competitive destination for investment include not only its political, economic and social stability but also a robust stock exchange. (Image: Board of Investment)
The Africa strategy of Mauritius appears to be paying off, with firms based out of South Africa and Zimbabwe showing increasing interest in tapping into opportunities offered by the island economy.
Mauritius has established its reputation as an international financial centre since the early 1990s. In 2013, for the fifth year in a row, Mauritius was ranked as the easiest place for doing business in Sub-Saharan Africa, becoming a favoured country for structuring cross-border investments into Asia, India, China and Africa.
Mauritius, which was once heavily dependent on sugar production and later tourism, has looked to increasingly diversify its economy, where manufacturing now makes up 17% of the economy.
While manufacturing is now the biggest contributor to Gross Domestic Product, other sectors including logistics, information and communication technology, finance and real estate are now playing a greater role in the island economy.
No wonder then that firms in neighbouring Africa, particularly South Africa and Zimbabwe, are waking up to the manifold growth prospects offered by the island economy.
Nitin Pandea, Senior Director at the Board of Investments, Mauritius, said in Sandton on Wednesday to the local press that South African investor interest in Mauritius has grown strongly over recent years, from individuals taking up incentivised properties as well as from big business.
He also noted that South Africans had bought a third of all Mauritian Integrated Resort Scheme (IRS) properties and smaller-scale real estate scheme properties sold to date, where two large IRS schemes have been completed while six are under construction.
The schemes are an initiative of the Mauritian government and are designed to encourage resort and residential property investments by non-citizens.
Pandea said foreign direct investment from South Africa had increased in recent years to about $100 million a year. Meanwhile, about 1,500 applications for residency permits had been granted to South Africans, where most of whom were professionals.
Moreover, Pandea said that the Mauritius Board of Investment was working closely with its South African counter to facilitate a “win-win situation” for both countries in expanding into the rest of Africa, where Mauritius is well positioned as a logistics hub for exports.
Not only South Africa, but its neighbour Zimbabwe too is increasingly viewing Mauritius as a gateway to international finance and planning to leverage it as a spring board for the expansion of its firms into other markets across the entire African continent.
The decade long economic meltdown, characterised by hyperinflation that peaked at 231 per cent in August 2008 in Zimbabwe, left many local based firms highly dismembered, financially weak and requiring huge fresh capital injection.
Companies that have of late been able to attract foreign capital include NMBZ (Norfund), Riozim (GEM Raintree), Seed Co (Vilmorin and Cie), ABC Holdings (ADC Mauritius), but such foreign funds have been few and far between in 2013 as foreign investors have tended to be overly cautious on Zimbabwe.
And, in what looks likely to be a growing trend, Zimbabwean conglomerate Innscor Africa Limited has moved its headquarters to Mauritius to tap into the jurisdiction’s abundant international capital that it needs to expand in Zimbabwe and regionally.
Some of the unique elements that makes Mauritius an attractive and competitive destination for investment include not only its political, economic and social stability but also a robust stock exchange – the Stock Exchange of Mauritius (SEM) – which plays an important role in giving investors access to offshore investments.
Furthermore, Mauritius is also signatory member to a number of international, regional and bilateral conventions and agreements, giving it preferential access to other jurisdictions, especially in Africa and Asia.