Operating from Mauritius has provided Sunibel Corporate Services Ltd. with a competitive edge, enhancing their operations and client services in today’s globalised business landscape. In this interview, Alan Rungassamy, Executive Director of Sunibel Corporate Services Ltd., discusses investment flows from the Mauritius IFC to African markets, challenges facing the IFC, regulatory evolution, and the importance of reputation in attracting investors and forging partnerships.
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How has operating from Mauritius provided your company with efficiency, considering the jurisdiction’s regulatory framework and international market access?
Definitely, operating from Mauritius has provided our company with a competitive edge, which enabled us to enhance our operations and efficiently serve our clients in our current globalisation context.
Investors look for stability, substance and predictability. Our regulatory framework, based on international best practices, has laid the foundations for a conducive business environment that encourages foreign investment and facilitates company incorporation.
This is complemented by the country’s highly qualified and skilled workforce (in areas such as AML/CFT, finance, legal, IT, and management), and with the robust and well-regulated financial services sector, enabling our clients to access a wide range of financial services and products locally, including banking, insurance, capital raising, project financing, and risk management solutions.
The network of bilateral and multilateral agreements (which include Double Taxation Avoidance Agreements, Investment Promotion and Protection Agreements and Free Trade Agreements) provide a significant advantage to our clients in terms of tax planning and wider market reach (as a member of the COMESA, SADC, EAC, and AfCFTA).
In your experience, what trends have you observed regarding investment flows from the Mauritius IFC to African markets? Which countries or markets within Africa show the most promise for investment?
The Mauritius IFC has been an instrumental conduit for investment into various African markets. Investors have recognised the potential and opportunities available in Africa’s rapidly growing economies, leading to increased investment structured through Mauritius. In 2021, more than $80 billion in Foreign Direct Investment (FDI) passed through Mauritius into Africa and more than 25% of Private Equity Funds investing in Africa are domiciled in Mauritius.
Based on the latest data gathered by the Financial Services Commission of Mauritius’ in its External Sector Statistics and National Accounts (ESSNAC) Survey, while historically there has been a focus on traditional investment destinations like South Africa, we have observed a diversification of investment flows to the Western and the Eastern regions of Africa.
The Mauritius IFC has been an instrumental conduit for investment into various African markets…
Alan Rungassamy | Executive Director | Sunibel Corporate Services Ltd
In the West, countries such as Nigeria, Ghana, and Côte d’Ivoire have seen increased investment inflows due to their large consumer markets, improved business environments, and abundant natural resources.
In the East, countries including Tanzania, Uganda, and Rwanda, are also witnessing growing interest from investors. These countries offer opportunities in sectors such as technology, energy, agriculture, manufacturing, tourism, and infrastructure development.
In Southern Africa: Countries like Botswana, Zambia, and Mozambique continue to attract attention from investors leveraging the Mauritius IFC. These countries possess abundant natural resources, infrastructure development opportunities, and expanding consumer markets.
From your perspective, what are the main challenges currently facing the Mauritius IFC, and how do you believe they can be addressed or overcome?
The Mauritius IFC faces several challenges that require attention and proactive measures to address them effectively. Here are some of the main challenges and potential strategies to overcome them:
The global focus on combating money laundering and ensuring compliance with international regulations has revealed a scarcity of resources for compliance and AML. Enhancing technological infrastructure and providing specialised training programs in collaboration with educational institutions, and attracting experienced professionals from other jurisdictions can help streamline compliance processes and improve efficiency.
The brain drain is a major challenge for Mauritius. Creating an attractive environment for professionals, offering competitive salaries, career development opportunities, and encouraging knowledge transfer programs can help retain skilled talent within the country.
The emergence of cryptocurrencies and the evolving FinTech landscape present both opportunities and challenges for the banking system in Mauritius. It is crucial to establish a clear and comprehensive regulatory framework that balances innovation and consumer protection, enabling the actors of the industry to efficiently provide the services offered by the IFC.
The post-COVID effects, combined with factors such as Brexit, political tensions, increase in raw material costs, the Russia-Ukraine war and macroeconomic indicators, has led to a significant rise in the cost of debt. Promoting access to finance for small and medium-sized enterprises (SMEs) through innovative financing models and creating a favourable investment climate can attract alternative investors and reduce reliance on traditional debt financing.
Some of these challenges are already being addressed. The recent national budget also focuses on addressing these challenges. Together, the government, regulatory bodies, financial institutions, and other stakeholders of the Mauritius IFC, have the power to collectively overcome these challenges and make our IFC even more competitive and sustainable in an evolving global landscape.
With several African countries establishing their own International Financial Centres, how do you evaluate this trend? Do you consider it a potential threat to Mauritius’ status as a financial hub, or are there opportunities for collaboration and synergies among these centres?
This trend should be seen as an opportunity for collaboration and creating synergies rather than a threat. Indeed, Mauritius has acted as a role model, a pioneer in establishing itself as a successful International Financial Centres in Africa, gaining recognition for its stable regulatory environment, investor-friendly policies, and strong financial services sector.
Each IFC may have its own strengths and specialties, such as specific industry focus, regional expertise, or unique market access. By fostering collaboration and sharing expertise, African IFCs can complement each other by creating synergies, and offering cross-jurisdictional products that attract global investors, and collectively contribute to the development of the continent’s financial ecosystem.
How do you manage geopolitical risks and navigate regulatory complexities across multiple countries?
From our perspective, as a Management Company, we operate within an IFC that is well-regulated and transparent, under the supervision of the Financial Services Commission of Mauritius. We dedicate significant resources to ensure compliance with regulatory requirements, and provide insights into our risk management strategies, fostering investor comfort and confidence in the way we operate. We keep ourselves updated about any regulatory changes occurring in jurisdictions where our clients and potential clients are.
Mauritius has acted as a role model, a pioneer in establishing itself as a successful International Financial Centres in Africa…
Alan Rungassamy | Executive Director | Sunibel Corporate Services Ltd
Geopolitical risks, on the other hand, are beyond our control. If we take the example of the Russia-Ukraine war, as a company, we suffer collateral damage, which include currency depreciation, reduced purchasing power, increasing inflation, increasing operational costs, etc. From this perspective, the government, policy makers and/or the Central Bank, in collaboration with all the stakeholders, are key to driving and implementing effective measures to counter such risks, alleviate the cost of doing business, and attract FDIs. For instance, it is through our concerted effort (by both the public and private sectors) that we are, today, a jurisdiction that is compliant with international best practices (e.g., OECD, FATCA, CRS, FATF).
How has the regulatory environment in Mauritius evolved over the years, and what impact has it had on your business operations and growth strategies?
We have witnessed significant evolution in the regulatory environment in Mauritius over the years. Being largely compliant with international standards, including the recommendations of the Financial Action Task Force (FATF), the OECD, and the EU to name a few, have had positive effects on our IFC, and consequently, our business operations.
Our regulatory environment in Mauritius places significant emphasis on compliance, particularly in relation to Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT), and the role of the Money Laundering Reporting Officer (MLRO) plus Compliance Officer (CO). The authorities have implemented rigorous measures and standards to ensure that businesses adhere to strict compliance protocols including robust Know-Your-Customer (KYC) procedures, thorough Due Diligence, and stringent reporting requirements.
As an actor in the industry, we have invested in building a robust compliance team, ensuring that we have qualified professionals overseeing compliance matters and keeping up-to-date with regulatory changes. This focus on MLRO and compliance helps us navigate the complex regulatory landscape effectively.
How important is the reputation and credibility of the Mauritius IFC for your company and its stakeholders, particularly in terms of attracting investors and establishing partnerships?
The reputation and credibility of Mauritius are of utmost importance for every actor of the economy. Investors seek jurisdictions that provide a stable and transparent regulatory environment, robust legal frameworks, and effective governance. The Financial Services Commission (FSC) and the Economic Development Board (EDB) are instrumental in positively shaping the reputation of the Mauritius IFC. The FSC blueprint and EDB guidance notes ensure that our operations align with regulatory requirements and international best practices, which are intended to help attract foreign investors seeking opportunities in Mauritius and the wider region.
As a Management Company, we prioritise these aspects, as we depend on the reputation of the Mauritius IFC to maintain our own status and credibility. The positive reputation of the Mauritius IFC serves as a validation of our commitment to conducting business in the right way, which instil confidence in investors and stakeholders who value credibility, reliability, and compliance in their investment destinations.