The rising up of the African countries through multiple measures to develop their respective economies is opening the door to wide investments opportunities for international investors. For the last decades, the flow of FDI into the continent is constantly on the increase – yet there are various challenges the international investors have to overcome to invest in African countries nowadays.
The international financial hub of Mauritius is bringing today the solutions to these challenges by turning them into opportunities and thus supporting constant development throughout the African continent.
Being part of Africa and through its strategic positioning, Mauritius is the ideal gateway to route investment into Africa.
Indeed Tropical Island Mauritius is considered to be the success story of the African continent with its favourable investment climate, political and social stability. It has through the last decades developed into an international financial services platform of repute for cross border operations.
Some of the salient features contributing to the choice of Mauritius as a preferred jurisdiction for investment into Africa are as below:
- A comprehensive network of Investment Promotion and Protection Agreements (IPPA’s)
One of the major challenges/threats for international investors investing in African countries is the risk of expropriation & nationalisation. Mauritius with his current network of IPPAs with African countries provide relevant guarantee and protection against such risks. In fact, IPPAs offers the following guarantees to investors from the contracting states:
– Free repatriation of investment capital and returns
– Guarantee against expropriation
– Most favoured nation rule with respect to the treatment of investment, compensation for losses in case of war or armed conflict or riot
– Arrangement for settlement of disputes between investors and the contracting states
|REGIONS||IN FORCE||AWAITING RATIFICATION AND ENTRY INTO FORCE|
|Europe and America||Barbados||Belgium/Luxemburg Economic Union||France (New)|
|UK and Northern Ireland|
|Africa and Middle East||Burundi||Egypt||Benin||Cameroon||Comoros||Gabon|
|Mozambique||Republic of Congo||Rwanda||Swaziland||Tchad||Turkey|
|Republic of Korea||Singapore|
- A good network of Double Taxation Avoidance Agreement (DTAAs), currently with 43 countries of which 18 are with Africa and more is in process of being negotiated and signed
- A business friendly environment with a simple attractive tax system – low tax regime with no capital gains tax and maximum3% net on income & No withholding tax on dividend payment, Interest and Royalties.
- Modern legislative and regulatory frameworks that are transparent and flexible with accountability
- Presence of all major International banks along with local banks(having branches in various African countries), with a diversified sets of offerings
- Trading in Major foreign currencies: No foreign exchange controls & free Repatriation of profits
- Excellent pool of skilled financial professionals fluent in English and French
- Good communication network, internet connectivity and well developed infrastructure
- Various benefits from being member of the Common Market for Eastern and Southern Africa (COMESA) & the Southern African Development Community (SADC) – refer to our slide presentation (Mauritius –Gateway to Africa)
- International Benchmark – Mauritius is the leader for African countries with respect to the following international indexes:
|Mo Ibrahim index of African Governance||1st|
|Global Competitiveness Index 2015-2016||1st|
|2015 index of Economic Freedom||1st|
|Global Information Technology Report 2015||1st|
Relevant activities for the grain processing industry through the Mauritian international financial centre.
– Investment holding
– International trading – Buy & sell through Mauritius
– Agricultural Machinery trade
– Added value processing in the Mauritian Freeport zones.
– International distribution platform
With the abundance of arable land over the African continent, there are opportunities for Indian grain producers to invest in agricultural land & plants within Africa.
For this purpose Mauritius could be used as the investment platform where the Indian producers, with the setting up of a Global business Company category 1, could channel their investments into the respective investee company in Africa.
– Favourable fiscal treatment especially where Mauritius has DTAA in place with the African Investee country.
– Existence of sound & reliable banking system for movement of investment funds into Africa and also repatriation of profits from Africa.
– Investment protection where there is Investment Promotion and Protection agreement (IPPA) in place.
– Returns on Investments can be parked in Mauritius for new re-investments into Africa.
The buying and selling of grain products could also be done through the Mauritian platform especially when the selling is with African countries – again where Mauritius has the favourable conditions mentioned earlier to ensure sound and safe trading transactions
Agricultural Machinery trade
Buying of heavy agricultural equipment for the development of grain cultivation and production from India & Asia by Mauritian intermediate entity and then these equipment’s could be leased, sold to the African countries. To note that relevant professional advice have to be sought for the proper structuring of the business.
Added value processing in the Mauritian Freeport & distribution platform
Grain production from both India and Africa can be channelled in bulk to the Mauritius Freeport where there would be some value-added services (packaging, branding and labelling, etc..) to convert the product in finished goods for sale. Here a domestic company with a Freeport licence would be relevant- for more details on the Mauritian Freeport, refer to our slide presentation (Mauritius –Gateway to Africa)
Thereafter these final packed grains commodity can then be redistributed to African countries through the Mauritian platform with all facilities in terms of storage, warehousing, logistics and Markets (through COMESA & SADC)
Similarly grain production from investee company in Africa could be send to Mauritius in bulk and from there the bulk would be broken into small quantities (new packaging, branding, etc..) for redistribution/sale to the SADC/COMESA market.
Attracting investors into the Mauritian financial Hub
In its quest to continuously attract investors into the country, the Mauritian Government has introduced a number of measures to enable these investors to set up business in and through the country.
Such measures are namely:
- Business friendly environment – starting a business activity in Mauritius is a simple and straight forward process. Within 3 working days, an investor can be operational. The Government has established step by step guides which provide comprehensive information on doing business in Mauritius.
- Simple and attractive tax regime (as mentioned above) which is summarised below:
|Capital gain tax||0|
|Withholding tax (Dividends)||0|
- Work & live program.
The Government has introduced the Occupation permit scheme which allows a non-national to reside and work in Mauritius. An Investor, a professional or a self-employed person may be eligible under certain conditions (www.investmauritius.com).
The Occupation permit is granted for a maximum period of 3 years and is renewable thereafter subject to certain established criteria. It should also be noted that the dependents of an occupation permit holder may also apply for residence permit.
Kross Border – your trusted Service Provider
Rich of its 23 years in the Global Business industry with its pool of experienced professionals, Kross Border would walk by your side on your business journey into Africa through the Mauritian financial platform. For any advices in terms of corporate & fiscal structuring, corporate administration, and others, our dedicated team would be delighted to service you accordingly.
Kross Border Corporate Services Limited
Jaye Jingree is the Managing Director of Kross Border and serves on its board of Directors. Prior to being the Managing Director of Kross Border, Jaye was one of the founding partners of KPMG Mauritius in 1985 and ex-Senior Partner of KPMG Mauritius. He has over 20 years of experience in the Global Business Sector in Mauritius. Jaye is a Fellow of the Institute of Chartered Accountants of Ireland and is a member of the Society of Trust and Estate Practitioners (STEP).