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AfricaMoney | August 20, 2017

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The Expert Explains: Why are there no US investment banks in Mauritius?

The Expert Explains:  Why are there no US investment banks in Mauritius?

Today, there are a plethora of investment and corporate banks in Mauritius, including globally successful names like Barclays, Standard Chartered and Investec, but the US banks, which are often in the vanguard of investment opportunities and their development, have, so far, stayed away.So, why are US investment banks not scurrying to Mauritius to set up shop and take advantage of the country’s unique expertise, skills base and geographical location?

For those who wish to dig deeper, here’s the explanation, straight from the desk of our expert guest contributor, Simon Nayyar, a reputed professional consultant in the financial services sector:

Africa’s economy is growing at an astonishing rate. And Mauritius is, as we all know, a well run tax jurisdiction with a mature and successful financial services sector. So, why are US investment banks not scurrying to Mauritius to set up shop and take advantage of the country’s unique expertise, skills base and geographical location?

Today, there are a plethora of investment and corporate banks in Mauritius, including globally successful names like Barclays, Standard Chartered and Investec, but the US banks, which are often in the vanguard of investment opportunities and their development, have, so far, stayed away.

The absence of US banks on the island is an enigma, given the strong and investor-friendly credentials that Mauritius offers. Of course, Mauritius, in common with many other countries, has taken its own fair share of knocks in recent years with GDP growth in 2014 having been lower than expected — at 3.2% compared to the projected 4%. But, few would seriously doubt the current government’s overriding policy commitment and practical programme, designed to revitalise and grow the country’s financial services sector, and to inject fresh vigour and momentum to underscore Mauritius’s status as a great place to do business.

A cursory glance at the continent shows that most US investment banks in Africa, for example Rothschild, JP Morgan, Citi and Goldman Sachs, have offices in Johannesburg. Besides, JP Morgan also has offices in Nigeria, Kenya and Ghana. Not all these countries, in recent times, have enjoyed the levels of political and economic stability that Mauritius takes for granted. Moreover, Mauritius has a resilient, reliable and profitable financial services sector, a sound and sustainable regulatory framework and an impressive track record in product and service innovation.

The two largest locally-owned banks in Mauritius, Mauritius Commercial Bank and State Bank of Mauritius, have investment-grade ratings which would make many lenders in the region turn green with envy. Furthermore, thirteen Mauritian banks made it to the list of ‘Top 200 banks in Africa’ in 2013 compiled by ‘The Africa Report’.

Nonetheless, Mauritius needs the US investment banks and the US investment banks need to be reminded why they should be located in Mauritius. The prospective benefits are huge and obvious ones. It would potentially accelerate their exposure to the continent’s growing economic opportunities. And of course, it would benefit Mauritius too. A perfect win-win situation, you might say.

But that brings one inevitably to the pressing issue of air connectivity and how long it takes to get from New York to Mauritius. It’s a real problem, and one we’ll return to in a future article.

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