Afsar Ebrahim, Executive Director of KICK Advisory Services, elaborates on the opportunities of the African continent for Mauritius. He is of the view that tapping Africa’s potential requires “a lot of financial resources and sound management”…
Featured in Investor’s Mag, 21th Edition, June 22 – Aug 22
Why is Africa becoming a bigger player in the global economy?
This does not apply to the continent as a whole. There are certain countries on the continent which is providing exceptional returns to investors. The continent cannot be ignored by virtue of the size of its population and the natural resources that exist. There are over 21 $ Billionaires and over 103,000 $ millionaires. In addition, there is a growing private sector that is becoming international players and solid regional players. They have embraced sound governance polices and professional management, attracting investments from Family Offices and PE Funds. The technology has also been a game-changer allowing various countries to leapfrog in terms of productivity gains. Let’s not forget that Africa has strong inter-regional trade and large internal markets, which make the economies resilient to external shocks. Africa is, therefore, today perceived as a source of wealth: both for those who want to create wealth due to exceptional returns and those who wish to take the challenge of the dangerous opportunities for an exceptional return.
Is Mauritius tapping Africa’s full potential?
Mauritius is already acting as a conduit for routing foreign investments into Africa. In addition, many companies forming part of Mauritius Inc. are operating in Africa and are looking to do more. Africa opportunities exist, but they are not only dangerous but sizeable too. It requires a lot of financial resources and sound management to be able to embark on cross-border transactions. The key is market understanding, finding the right partner on the ground and market knowledge. In any cross-border deal, the investor must be a dominant player in its home market and looking to diversify by going overseas. You cannot be a small player at home and a big player abroad. However, competitive advantages in home country cannot be replicated. Hence, Africa represents a fraught opportunity and a challenging potential for Mauritius Inc.
As a financial hub, what does Mauritius offer to investors looking to invest in Africa?
Mauritius is an International Financial Centre of substance, and repute and is well regulated. It offers a complete solution to investors in world-class banking sector, professionals on top of their game from Offshore Management Company, Lawyers, Accountants and Tax Advisors. The attractiveness of using Mauritius is that it enables investment to be structured in a way that takes advantage of an ecosystem which reduces the investor’s cost of capital, thereby enhancing its potential return on investments. With the number of IPPAs signed, Mauritius adds another layer of comfort for investors protection in addition to the independence of the judiciary and the country’s regulatory framework.
In this period of uncertainties, what are the opportunities for business in Africa?
The business opportunities cannot be painted with one brush across the continent. It has to be zoomed in on different countries, different industries and different opportunities. South Africa offers a range of opportunities which differ to say Mozambique; what Kenya can offer in terms of FinTech, you won’t get those in Ivory Coast. What DRC offers, it cannot be compared to Egypt. However, certain industries offer opportunities in most countries: Health Care, Agro, FMCG. Ideally, a business that is involved in B2C will be more rewarding and attractive than a manufacturing one.
With 54 countries, Africa is like an economic puzzle. How should investors approach the world’s next big growth market?
Spot on analogy with Pizza. Africa’s dangerous opportunities are as complex as a pizza where the understanding requires a lot of homework: Produced in a Circle, sliced in a Triangle, and served in a Square Box!!. Knowledge of Terrain is key and knowledge of the rule of game is even more important. Before investing in a business, sound investment must be made in market research, financial and legal diligence, and more importantly embark on diligence of the local partners. As people do business with people, ensure there is the right vibes with the support of Transaction Advisors, so that parties are comfortable and supported by sound legal agreement.
The National Budget 2022/23 will be presented in June. What types of measures could help Mauritius meet Africa’s immense unfulfilled demand for goods and services?
We need more marketing so that Africa perceives Mauritius as an enabler and source of Foreign Direct Investment. We need to do more business facilitation for trade flows between Africa and Mauritius. Finally, the logistics must be addressed so that Mauritius is closer to the continent.