BUSINESS IN

MAURITIUSSPECIAL REPORT 2012

PUBLISHED BY GLOBAL INVESTMENT I LIMITED & DISTRIBUTED WITH THE SUNDAY TELEGRAPHPhotograph of Port Louis, provided courtesy of Mauritius Tourism Promotion Authority.

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BUSINESS IN MAURITIUS

The Vice Prime Minister, Minister of Finance and Economic Development, Shares his Views and Vision regarding the Development of Mauritius as an International Financial Services Centre of Substance.

Mauritius over the years has paved its way from being a mono-crop economy to be-coming a well-diversified economy, fully integrated into the world economy, com-prising different sectors of equal impor-tance like Agro-Industry, Export-Oriented

Manufacturing, Tourism, Information and Communication Technology and Financial Services. Mauritius has indeed been successful in developing an International Financial Services industry, which offers a broad range of products, including banking (retail, investment, corporate, Islamic and private), global business, insurance and re-insurance, legal services, fund management, wealth management, leasing and capital and commodity market dealings amongst others. Established in the late 1980’s, the Mauritius International Financial Services industry has rapidly emerged as an important pillar of the Mauritian economy, currently contributing around Rs.30 Billion (USD 1 billion) to GDP, which represents about 10% of the GDP. Total direct employment in the sector stands at around 10,000 and indirect employment at around 3,000. Employment in the sector is quality and remunerative employment, especially for young graduates and professionals. It is a rapidly growing source of Government revenue accounting for about 30% of total corporate tax receipts, i.e. about Rs. 3 billion (USD 100 million) presently. I am determined to further develop and expand the sector for it to remain an engine of growth and employment creation. The continual development of the sector is actually part of our strategy under the Economic and Social Transformation project to move Mauritius from its current income of USD8,000 to a higher income country of USD14,000 per capita over the next ten years. I believe that the key to the further expansion of the Mauritius International Financial Services industry resides in market and product diversification and capacity building. In that respect, we have taken the following actions:

• In the last six months we have enacted three major financial laws, namely the Limited Partnership Act, the Foundation Act and most recently the Private Pensions Act to enhance our product offerings. I will soon propose a Limited Liability Partnership law.• We are expanding our networks of Double Taxation Avoidance Agreements (DTAAs) and Investment Promotion and Protection

Agreements (IPPAs) to implement the most enabling framework supportive of our Global Business Industry. In the last six months, we have signed a DTAA and an IPPA with Kenya and Nigeria, we have negotiated a DTAA with Gabon and IPPAs with Gabon and Kuwait. We plan to negotiate other treaties with Tanzania, Malawi, Maldives and Hong Kong over the next six months.• We are positioning Mauritius as the preferred gateway for investments into Africa through a more active use of our new economic diplomacy initiative. In this regard we have appointed two roving ambassadors to focus specifically on Africa and countries of the Indian Ocean region with a view to developing these markets.• We are transforming our airport into a new hub for the region to provide interconnection between Africa and the rest of the world.• We are giving a spur to the Knowledge Centre of Excellence. To this end, we are implementing measures to boost the number of foreign students, like the introduction of a new Student Visa Scheme, allowing students to work on a part-time basis, setting up of a specialised unit for processing applications of foreign students, scholarships and visas and requiring every education institution to set up a facility for assisting its foreign students to find accommodation. Accreditation and mutual recognition of qualifications in SADC, COMESA and India will also be given priority as part of the economic diplomacy initiative.• We are re-affirming our reputation as a clean and transparent jurisdiction, compliant with international norms and standards. We have recently become a party to the IOSCO MMOU and propose to adhere to the Multilateral Convention on Mutual Assistance in Tax Matters jointly developed by the OECD and the Council of Europe. The Mauritius International Financial Centre is well known among the international investor community as being the destination of choice for the structuring of investments into India. We are committed to consolidating that position. We will continue to work with India and offer our full collaboration to find mutually acceptable solutions to deal with the issues that have been raised by India. As an International Financial Centre, our reputation and the way we do business has always been a key part of our development strategy. Mauritius may be a low tax jurisdiction but in terms of compliance with international norms and exchange of information, it is amongst the leading countries in the world. I am confident that the Financial Services industry will continue to be and must remain an important component of the Mauritian economy.

Editor: Joseph BoveCountry Consultant: Steven SengayenDesign: Kuljit Kaler

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The views expressed in Business in Mauritius Special Report 2012 are not neccessarily those shared with the publisher, Global Investment I Limited. Wishing to reflect the true nature of Mauritius, the editor has included articles from a number of sources, and the views expressed are those of the individual contributors. No responsibility or liability is accepted by Global Investment I Limited for any loss to any person, legal or physical, as a result of any statement, fact or figure contained in Business in Mauritius Special Report 2012. This publication is not a substitute for advice on a specific transaction.

By Hon. Minister Xavier Luc Duval

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A Well Established IFCThe importance of sound regulation and transparency in attracting international business.

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The main objective of the Mauritius Financial Services Commission (FSC) is to foster a sound economic environment conducive to promoting business and safeguarding the integrity of Mauritius as an International Financial Centre of repute.

The FSC operates within a strong regulatory framework, as laid down in the Financial Services Act 2007 which takes on board international norms and standards expected of a regulator/supervisor. The powers given to the FSC cover effective supervision of its licensees through access to information, inspection and investigation. The exchange of information by the FSC and other regulators constitutes a key mechanism for effective monitoring and supervision. Significant efforts have been made by the FSC over the years to promote disclosure and transparency; for example, the FSC has already signed 26 MOUs with local and international institutions. At the end of May 2012, Mauritius was one of the 86 jurisdictions signatory to the IOSCO MMOU. In addition, the OECD in its Peer Review Report, both Phases I and II reviews, on the FSC’s legal and regulatory framework and implementation of international standards on transparency and exchange of information in 2011, recognised the accomplishment of Mauritius and confirmed its status as a trusted, transparent and well established IFC. It should also be noted that Mauritius has always been on the OECD’s ‘white list’ of jurisdictions. Mauritius prides itself as an International Financial Centre with not only a sound regulatory framework focused on best practices, fairness, efficiency and transparency of financial institutions and markets, but also one which plays a major role in cross-border investments and in structuring worldwide investments. Mauritius has a pool of highly qualified and dedicated bilingual workforce providing world-class service at comparatively low costs, business-friendly economic climate, geographical location, hybrid legal system comprising of civil and common law (French and English) and a network of double taxation agreements. Most of the Mauritian accountants, economists, lawyers and professionals in the financial services sector are UK qualified and many have worked with international organisations in different parts of the world including Europe. The FSC is a member of international standards setting bodies namely the International Organisation of Securities Commission (IOSCO), the International Association of Insurance Supervisors (IAIS), the International Organisation of Pension Supervisors (IOPS) and the Islamic Financial Services Board (IFSB). Keeping abreast of and meeting international standards and norms have become a necessity for regulators in order to ensure transparency and to take measures to enhance the intensity and effectiveness of multilateral supervision. Mauritius ranked 23rd out of 183 economies (1st in Africa), in ease of doing business by the World Bank Doing Business Report

2012. Mauritius ranked 13th out of 183 economies in protecting investors by the same report. The island also topped the rankings in Africa for a number of other international classifications, such as the Mo Ibrahim index of Good Governance, the Economic Freedom Index and the Forbes Best Countries for doing business. For centuries Mauritius has been known as the Star and Key of the Indian Ocean. Today this is also true for financial services, namely with the historical and cultural ties (Africa, Asia and Europe) and geographical position giving the island a competitive edge over other financial centres. Mauritius’ experience and proximity with Africa positions it as the ideal platform for investment. Mauritius acts as a pioneer for the investors and partner for countries in Africa where the investments are made. In recent years, the FSC has streamlined its procedures to make licensing procedures more efficient. With the impact of the Global downturn on India, China and other countries, companies and individuals making an abusive use of jurisdictions to reinvest in their home countries are being heavily criticized. In this context, India has recently announced that it will apply the GAAR – General Anti-Avoidance rule on investors making an abuse of the DTA. Round tripping, as described above, is heavily condemned in Mauritius and the FSC has introduced specific preventive measures in relation to investments in India, through the introduction of Tax Residency Certificates and specific licensing conditions. In addition, the FSC exchanges information with India through SEBI and other relevant Indian enforcement authorities. The FSC’s efforts in areas of exchange of information have even been recognised by the OECD. The FSC exchanges information with its counterparts both locally and abroad through its bilateral and multilateral MOUs including the IOSCO MMOU. Such a framework provides them with an extensive network amongst regulators and reinforces their cross border supervision. The FSC’s regulatory framework is continuously being strengthened to ensure they meet international norms to combat money laundering and financing of terrorism. The objectives of the FSC and Mauritius are clear – to build a sound jurisdiction of good repute which provides the necessary safeguards for investors. The FSC Board has identified three strategic pillars for the year 2012-2014, which are financial stability, competitiveness and diversification. The strategic plan sets out the priorities within the over arching vision of the Government to position the financial services sector as a key sector of the economy and consolidate Mauritius as an International Financial Centre. Mauritius is a jurisdiction of substance and offers quality financial services. The island has created a regulatory environment that provides the platform for diversified products and business sophistication in line with expected international norms for all investors. The future of the Mauritian financial services sector lies in the sound framework and conducive environment it provides to global investors.

Clairette Ah-Hen, Cheif Executive, FSC

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Powering the EconomyBank of Mauritius plans for another year of commendable growth while the country’s largest trading partner Europe is still stalled.

According to the Bank of Mauritius Act 2004, the primary object of the Bank of Mauritius (BOM) is to maintain price stability and to promote orderly and balanced economic development. Under the Act, BOM is also responsible for regulating credit and currency in the

best interests of the economic development of Mauritius; to ensure the stability and soundness of the financial system of Mauritius; and to act as the central bank for Mauritius. The BOM conducts monetary policy and manages the exchange rate of the rupee, taking into account the orderly and balanced economic development of Mauritius; regulates and supervises financial institutions carrying on activities in, or from within, Mauritius; manages, in collaboration with other relevant supervisory and regulatory bodies, the clearing, payment and settlement systems of Mauritius; and manages the foreign exchange reserves of Mauritius. The Bank of Mauritius and the Financial Services Commission (FSC) signed a Memorandum of Understanding (MOU) in December 2002 to set out the framework for co-operation between BOM and the FSC in their common pursuit to maintain a safe, efficient and stable financial system in Mauritius. On 08 February 2012, a Protocol was signed to amend the MOU to reinforce the framework for effective exchange of information between BOM and the FSC. Following the MOU, the two regulatory bodies have set up Joint Working Groups with a view to harmonise licensing and regulatory requirements thereby minimising disparities and discrepancies in Know Your Customer (KYC) prescribed norms. The aim of the Working Groups is also to complement guidelines applicable to financial institutions which fall under the regulatory purview of both institutions in an effort to promote a more structured and active collaboration and coordination with a view to respond to threats to financial stability, synchronise information sharing and avoid duplication. The banking sector in Mauritius comprises twenty banks, of which, five are branches of foreign banks, seven are subsidiaries of foreign banks and the remaining are local banks. The country is also host to three Global Systemically Important Financial Institutions, which operate as branches of foreign banks. The first full-fledged Islamic bank started operations in 2011. The banking sector in Mauritius was insulated from the effects of the global financial crisis due to a combination of robust risk management in banks and proactive regulations. Banks have not been dealing in complex products and did not have any exposure in the sub-prime securitised products that were the source of the crisis. On the regulatory front, although banks are required to maintain a minimum capital adequacy ratio of 10% as opposed to the international norm of 8%, they have been conservative in their capital management by operating with an appreciable buffer. As of 31 March 2012, the capital adequacy ratio for the banking

sector stood at 16%. Noticeably, the capital base of banks in Mauritius is made up mostly of Tier 1 (permanent) capital. In the first quarter of 2012, the ratio of Tier 1 capital to total capital amounted to 90.1%. It is also observed that in spite of the parlous economic situation internationally, the Mauritian banking sector has continued to grow albeit at a slower rate. Total assets, which amounted to USD 24.5 billion in December 2009, increased by 14.9% in 2010 to USD 28.2 billion and further by 2.3% to USD 27.2 billion at the end of December 2011. An increase in total assets may translate into higher non-performing loans if banks relax their lending procedures. However, banks in Mauritius continue to be rigorous in their approach and the ratio of non-performing loans to advances has remained within manageable levels. In December 2009, the ratio stood at 2.9%, while in the following year, it declined to 2.4% notwithstanding the fact that total assets expanded by 14.9%. The ratio increased marginally to 2.5% in December 2011. The banking sector continued to remain profitable in the face of the global financial meltdown. As of 31 December 2009, profits after tax aggregated to USD 330 million. In the following year, they increased to USD 450.9 Million but dropped to USD 408.5 million in 2011. The two largest local banks, namely The Mauritius Commercial Bank Ltd. and State Bank of Mauritius Ltd., are rated by Moody’s Investors Service. In reflection of the health of the Mauritian banking sector, Moody’s Investors Service upgraded the long term foreign currency deposit of State Bank of Mauritius Ltd. from Baa2 to Baa1. This is in the aftermath of the country’s foreign and local currency government bond ratings were upgraded from Baa2 to Baa1 on 26 June 2012. In March 2011, the BOM became one of the first central banks in Sub-Saharan Africa (SSA) to start publishing overall CAMEL ratings for individual banks; thereby contributing to enhance transparency about the state of the banking system. The composite CAMEL rating for individual banks is disclosed to the public on a bi-annual basis in June and December of each year on the BOM’s website. The Bank of Mauritius also implemented the Small and Medium Enterprises (SME) Financing Scheme, which was announced in the Budget Speech 2012. It is widely recognised that the SME sector can be an important engine for economic growth. The SME Financing Scheme has provided a much needed boost to this sector. Under the scheme, Banks are required to extend credit facilities of a cumulative total amount of USD 98 million to this sector, over the next three years at a rate of 3% above the prevailing Key Repo Rate, that is USD 32.6 million annually. Statistically Mauritius forecasts that the economy would grow by 3.5% in 2012. Exports of goods and services are estimated to increase by 7.5% and in real terms, this would represent a growth of 4.4%.The Bank of Mauritius does expect that the economy will navigate through the current troubled waters and set course for a commendable performance of growth in 2012.

Yandraduth Googoolye First Deputy GovernorBank of Mauritius

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How would you assess the evolution and performance of the Stock Exchange of Mauritius since inception? The Stock Exchange of Mauritius (SEM), was set up in 1989 as part of an overall initiative to modernise Mauritius’ financial services sector and accelerate the transformation of Mauritius into a modern and diversified economy. The SEM started its operations as a small pre-emerging Exchange with a manual trading platform, but over the last two decades witnessed a significant overhaul of its operational, technological and regulatory frameworks, which has placed it among the leading exchanges in Africa in terms of operational excellence. The size of the market has also grown from a market capitalisation of only USD 100 million in 1989 to a current market capitalisation of about USD 8 billion, representing nearly 70% of Mauritius’ GDP. SEM is actively pursuing an internationalisation strategy which aims at building its current and future growth by attracting international listings to capitalise on the highly attractive incentives that Mauritius offers. On the performance front, time-series data indicate that, notwithstanding the cyclical evolution of stock markets, investors have been handsomely rewarded. Between 1989 to date, the all-share price index, SEMDEX, has achieved a compound annual return of 13.2% in local currency terms, while the total-return index, SEMTRI, has realised a compound annual return of 19%. The top performing company has generated an annualised total return of 24% since 1989.

How has the global economic downturn impacted the performance of the SEM? Since the demise of Lehman Brothers in September 2008, the SEM has evolved in a highly volatile environment and its performance has been impacted by the unfolding of events at the international level as well as the ramifications of the global economic downturn on the Mauritius economy and the performance of listed companies. Prior to September 2008, the SEM had witnessed a very strong bull-run of six years during which the total return index, SEMTRI, had experienced an astounding growth of 650% in dollar terms on the back of sustained double-digit earnings’ growth by many listed companies. Since the onstart of the crisis , the all-share price index, SEMDEX, has lost some of its value, in a somewhat volatile environment characterised by periods of market upswings due to bargain-hunting.

Why should a foreign investor consider investing through the SEM? The SEM has been a powerful wealth-creation platform for investors who have invested in the two markets we operate, namely the Official Market and the Development and Enterprise Market. Time-series statistics show that the all-share index, SEMDEX, which tracks the price performance of companies listed on the

Official Market has shot up by 1,630% between 1989 to-date, while the total return index, SEMTRI, has grown by 5,180% during the same time-frame. The depth of the current financial crisis has, somewhat dented the performance of the market during the last four years, but the listed companies have been swift to react to the current situation through a review of their business models and by shifting their focus towards new emerging regions in Africa and Asia. The market is therefore, well-positioned to bounce back and reward investors who have a medium-to-long term view. Therefore the timing may be right for foreign investors to include the SEM on their list of investible markets.

Mauritius is positioning itself as the service platform for Africa. How is SEM aligning its strategy with that of the Government? During the last two years the SEM has embarked upon an internationalisation strategy which aims at transforming the Exchange from an equity-centric domestic exchange into a multi-asset class internationalised exchange. This new strategic orientation also involves the positioning of the SEM as an attractive listing, capital-raising and trading platform for African ventures. We have set, for example, a multi-currency trading platform that allows African issuers to list and trade their securities on the SEM platform in USD, Euro and GBP at very competitive costs and ensures the settlement of the underlying transactions in these three international currencies. This trading platform is particularly attractive for African issuers who wish to raise capital from international investors to fund their activities. A listing on SEM’s multi-currency platform will not only raise the international visibility of African issuers, but it will more importantly facilitate their capital-raising ability at competitive costs as it offers international investors a natural hedge against African currency risks. Our Africa focus has also prompted us to introduce listing and trading rules for mining and exploration companies as well as for sponsored and unsponsored depositary receipts.

What are your views about Africa’s growth potential and how can this impact the future of African Stock Exchanges? Africa is widely considered as the last growth frontier for numerous reasons. Africa is home to 25% of the world’s resources and there is a little doubt that the demand for these resources from the high growth emerging regions of the world will spur African economies’ growth in the years to come. However, Africa’s growth potential is not only resource-based. Africa’s growth is also linked to the radical shift in economic policies, the implementation of structural adjustment programmes, increased private sector and international investments, a growing middle-class, amongst other factors. I have little doubt that African Exchanges will benefit from this major step in Africa’s economic future and will be called upon to accompany and accelerate this changing economic momentum.

Raising the StakesAn innovative Stock Exchange in Mauritius creates a platform for African based ventures to raise capital competitively.

Interview with Sunil BenimadhuChief ExecutiveThe Stock Exchange of Mauritius

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BUSINESS IN MAURITIUS

Africa’s Investment HubDynamic growth set for the multi asset class exchange GBOT presents great opportunities for foreign investors.

Mr. Ansalam, you are regarded as a start-up specialist within the exchange ecosystem field. What range of products, as well as new asset classes, can we expect from GBOT? We have initiated discussions with stakeholders in respective African countries on the proposition of introducing Africa centric currencies and commodities that will equip businesses in Africa with transparent, exchange traded investment and risk management solutions. We are also working towards the launch of the equity market segment on GBOT and have received the FSC approval to introduce CFDs, Index futures and options and Single Stock futures and options. The products will soon be made available to the global financial community and subsequently we are looking to introduce equity cash segment that will include listing of company shares, Depository Receipts, ETFs, ETCs and other structured tradable cash market products. Stress is on innovation that is focused on the growing needs of the market participants. Along with conventional products, GBOT will have a suite of products that will reflect the needs of the markets (that GBOT serves) which was, up until now, unaddressed.

How important has a strong working relationship with the FSC been for GBOT? We highly appreciate and value the operational swiftness, high speed of execution and proactive approach of the FSC that has led us to invite financial market participants to set up a functional base in Mauritius and to contribute to the strengthening of Mauritius’ position as an international financial centre of repute. The regulatory framework of Mauritius and vision of FSC towards developing and diversifying its capital market infrastructure is encouraging for us to introduce new and innovative products and segments that will attract investor interest and participation.

At the time of GBOT’s inception, gold was starting to trend toward all-time highs, how did this help GBOT achieve tremendous growth in the first couple years of operation? During the launch of GBOT in October 2010, the value of gold was just below USD 1400 per ounce that rallied to over USD 1800 per ounce in less than a year, which presented an opportunity for investors and traders to capitalise upon and contribute to the volumes of trade on GBOT. The concurrence of GBOT rates with the global benchmarks and high volatility in the market recently has led to active participation on the globally traded products like Gold, WTI Crude Oil, EUR/USD and GBP/USD from both trading and hedging perspective. As of date, GBOT has a total of 21 active members and 14 applications under process from Africa, Asia, the Middle East and Europe. The majority of volumes are generated from the Asian and Middle East Markets and we are actively seeking to invite participation from Africa, the United Kingdom and the United States in order to bridge

the trade and investment channel between the frontier, emerging and developed economies. To date, we have Barclays Bank, State Bank of India (Mauritius) and Banque Des Mascareignes as the three clearing banks that have an extensive global presence in various time zones including the UK and Europe. The Clearing Banks are sufficient for GBOT for its present requirements but GBOT is open to adding more Clearing Banks as per its business needs.

How is GBOT aligned to the vision of Mauritius Inc. in strengthening its position as a leading IFC and being the gateway of choice for the emerging Africa opportunity? When the idea of GBOT was being conceptualised, the objective was to be part of the Africa growth potential and generate wealth creation opportunities in Africa. With this in mind, we needed to be present in a jurisdiction which was politically and socially stable, had a strategic location, could be accessed by global markets through a conducive regulatory structure and had a strong potential to be a global business and finance hub with an efficient banking system. As a world leader in creating Greenfield exchanges, Financial Technologies Group of India has invested over USD 50 million in Mauritius. This is a sheer representation of confidence that the group has in the potential of Mauritius, that it is in a position to establish itself as one of the fastest growing countries and become a hub for Africa in a manner similar to how Singapore is for South East Asia and Dubai for the Middle East. The state-of-the-art, new generation trading platform of GBOT was developed by its parent company, Financial Technologies Group, whose deep domain expertise gives us a decisive edge in driving mass disruptive innovation at a speed and cost of execution that is unmatched in the financial markets. By inviting financial market players to have substantial presence in Mauritius and enhancing trade and investment through GBOT, we stand consistent to our objective of growth and development of financial markets in Africa and emerging economies with Mauritius being the epicentre. GBOT set up with an aspiration to bridge the investment interest between global investors and emerging Africa through the creation of new age tech centric financial markets that will provide content and substance for reputed global firms in the realm of investment banking, brokerage, fund management, risk management and capital market research. We welcome and extend an open invitation to market participants located in London to be part of the Africa growth story, through GBOT’s Africa focused commodity derivatives, currency derivatives and proposed equity segment. The fund houses, brokerage houses and investment banks may also look at introducing global products on GBOT and invite participation of African players.

Interview with Mr. Rinsy Ansalam, Managing Director & Chief Executive Officer of Global Board of Trade Ltd.

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Playing a Winning HandAfrAsia Bank thrives amidst the world’s worst financial crisis.

W hen struck by the major external shock of the global financial crisis, Mauritius demonstrated its capacity to respond effectively, to adapt its policies and even rethink the countries’ strategies to brace for the economic challenges.

The economy has shown a substantial degree of resilience and built an environment conducive to a dynamic capital market and financial solutions to maintain its offshore vision as a window of investment opportunities. While some thought Mauritius would not be spared by the crisis, James Benoit, CEO of AfrAsia believed the financial sector would remain the linchpin of the island’s economy. AfrAsia Bank Limited, a boutique bank headquartered in the Mauritius International Financial Centre, which Mr. Benoit co-founded in 2007 and leads on behalf of the largest conglomerate in the country GML, has successfully manoeuvred the world’s worst financial crisis to position itself as a regional powerhouse of local relevance and international standing. Since the start of its operations, the bank has fully leveraged Mauritius’s strategic advantages and long established links with Africa and Asia to be the reference point for Corporate and Investment Banking, Private Banking and Global Business Solutions linking Mauritius and the Africa-Asia trade corridor. Their vision is in their name. “AfrAsia Bank was among the first to recognise the growth potential of the African lions in matching the rise of the Asian tiger economies,” said James Benoit. Over the past five years of operation, AfrAsia has grown rapidly with regulatory capital increasing ten-fold and today the Bank is liquid and well capitalised with three representative offices in South Africa. The bank’s business model is based on a global perspective, local presence and solid financial expertise which meet with the convergence of a clear vision as well as a seamless blend of holistic solutions and innovative product offering. The customer response to this new brand and bank has been outstanding, achieved through an intensely focused distribution model, social media, thought leadership and speaker events promoting Africa and Asia to the world.

Local expertise with regional reach.While Mauritius maintains the good reputation of its financial sec-tor as a sound, stable, transparent and internationally recognised by its counterparts, AfrAsia Bank is pursuing its audacious strat-egy to tap into the growing trade, investment and capital flows between Africa and Asia. They have opened three representative offices in South Africa, renamed as AfrAsia Corporate Finance, to develop their cross-border global banking services and have also attracted international shareholders - Intrasia Capital (Singa-pore), PROPARCO (France) to facilitate regional and international growth. Furthermore, their 50% stake in one of the leading asset

management firms in Mauritius, AXYS Capital Management, com-plete their private banking and wealth management services. This year AfrAsia engaged in an important strategic move by using Zimbabwe as a launch pad, investing in a bank now rebranded as AfrAsia Kingdom Zimbabwe Limited. With the startling impact of the dynamic duo of the Indian elephants and the Chinese dragons in the picture, AfrAsia Bank has also been the first Mauritian-owned bank to obtain a Foreign Institutional Investor (FII) license for global business flows into India. AfrAsia also launched its Renminbi Yuan services to address augmented investor appetite and the ever-evolving wealth management needs of their clients who intend to capitalise on new business opportunities in the Chinese market and the China-Africa trade corridor.

As a testimony to their market positioning and bank different approach to customer service, AfrAsia Bank received the ‘Best Private Bank in Mauritius’ 2011 award, followed up by ‘Best Local Private Bank in Mauritius’ 2012 and ‘Best Private Bank for the Super Affluent’ 2012, all from Euromoney. “This has been a real success story considering that just five years ago, the name ‘AfrAsia’ was viewed as a risky strategy - people wondering if the ‘Africa’ part would jeopardise its standing. It is no easy business being in the ring with the hungry lions so you need to have strategies and tactics. Just like lion taming,” reveals CEO James Benoit.

What lies ahead?Africa is the next big thing, and especially as India and China continue to engage with it and whereby Mauritius is well positioned to be the financial gateway to Africa. We might well say that the mission of AfrAsia Bank is to be Africa’s story teller. Banks like AfrAsia Bank are poised to make substantial investments, which not only leverage their skills sets, but also use Mauritius as a regional financial jurisdiction. Coherent with their global strategic direction and the reinforcement of the bank as a global brand, AfrAsia is looking forward to multiple growth opportunities through acquisition in other African markets, the forging of strategic alliances and sustaining a favourable position as a boutique financial institution. AfrAsia Bank offers a strong regional economy looking for dynamic capital market and banking solutions to facilitate phenomenal expansion and participate in the African growth story.

“AfrAsia Bank was among the first

to recognise the growth potential

among the African lions matching the

rise of the Asian tiger economies”

James Benoit, CEO of AfrAsia Bank

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BUSINESS IN MAURITIUS

Inside Perspective:Dr. Rama Sithanen discusses the evolution of Mauritius as a globally competitive business and financial hub.

For a long time after its independence in 1967, Mauritius relied on sugar, textiles and tourism to sustain its economic growth and social development. There was an urgent need to diversify the economic foundations of the country to enhance its resilience to external shocks and to provide gainful

employment opportunities to the growing educated population. Since its humble beginnings in the late 80’s, financial services and global business activities have emerged as one of the most important pillars of the economy, accounting for a rising share of growth and gross domestic product, employing an increasing proportion of skilled people and contributing significantly to foreign exchange earnings and tax receipts in addition to its catalytic effects on other sectors of the economy. Mauritius has emerged as a tried, tested and trusted international financial centre of choice, stability, repute and substance. This is due to a well crafted strategy driven by strong institutional set up, pro-active business, legal and regulatory framework, bold economic reforms and attractive fiscal and non-fiscal incentives. It has also leveraged its strategic geographical location to become a premier international financial centre in the African continent. The island’s exceptional political and social stability, its close historical and cultural ties with many countries due to the diversity of its population, its pleasant and secure living environment, its good corporate governance and its sound and predictable economic policies have helped to sharpen the attractiveness and competitiveness of the jurisdiction. It has a robust democratic system of government, including an independent and efficient judicial administration. As a member of the British Commonwealth, Mauritius has retained the recourse to the judicial committee of the Privy Council in the UK as the highest Court of Appeal. This has enhanced confidence in the country’s international standing. Mauritius has adopted best international practices in its laws and regulations to prevent the jurisdiction being abused. It fully supports global initiatives aimed at combatting money laundering and terrorist financing and it features on the OECD white list for international financial centres. The country has good telecommunications, business and IT infrastructure and well established banking and financial institutions including a stock exchange and an international electronic multi-class asset exchange. One of the most compelling attractions, is its young, dynamic, competitive, bi-lingual and well educated labour force that has acquired the necessary experience and skills to deliver timely, quality and competitive services to global corporate end users. Mauritius is also within a convenient time zone in relation to the United States, Europe, Africa and Asia which facilitates seamless business throughout the day. It has a mixed legal system that incorporates aspects of Anglo-Saxon common law and French civil code and thus enables local practitioners to be at ease with the laws in force in most major foreign jurisdictions. The use of both the

English and French languages provides Mauritius with easy access to the international business community. Mauritius is a jurisdiction that combines the tax efficiency features of a traditional international financial centre with the characteristics of a treaty–based jurisdiction with a wide network of double taxation conventions. It has no exchange control and allows free repatriation of profits and capital. Corporate taxes are at 15 per cent with a deemed foreign tax credit that significantly mitigates the effective tax rate to a maximum of 3 per cent. There are no withholding taxes on dividends, interests and royalties while capital gains on disposal of securities and other movable property are exempted from taxation. Occupation and residence permits for eligible expatriates are issued within 3 days and business licences and permits within 15 days. Africa is a very resource-rich continent and a land of tremen-dous opportunities. It has huge requirements for infrastructure, mining, utilities, telecommunications, agriculture, financial services and consumer facing goods. New funding sources, such as private equity, is absolutely vital to meet these needs. The continent will at-tract substantial flows of foreign direct and portfolio investment as the next frontier market. These investments must be structured to optimally manage risks, avoid pitfalls on the ground and generate good returns. Mauritius enjoys preferential access to the EU, US and African markets. It has signed many Double Taxation Avoid-ance Treaties and Bilateral Investment Treaties with a host of Af-rican countries. These treaties provide, amongst others for; risk mitigation, reduction or elimination of withholding and capital gains taxes, free repatriation of investment capital and returns, guarantee against expropriation and most favoured nation rule with respect to treatment of investment. The country is a major player in regional economic coopera-tion and integration in Africa. It is a member of the Southern African Development Community and the Common Market for Eastern and Southern Africa which provides duty free and quota free access to a market of around 600 million people. Mauritius is leveraging these ‘assets’ and its track record as an IFC of repute to emerge as the natural gateway to channel those investments from the rest of the world into Africa in a tax efficient manner. It has set out a clear vision to consolidate its economic and commercial relations with Africa and to seize the huge opportunities abounding on the conti-nent. It is proactively reviewing its legal, regulatory and product and services offering to become the premier financial centre for busi-ness, trade and investment between Africa and other continents. New vehicles such as limited partnership, foundations and Islamic Finance broaden its appeal to global investors. Legislation has also been enacted for Mauritius to become a centre for International Commercial and Investment Arbitration in the African Region. The country is well poised to achieve its ambition of emerging both as an international centre of substance and a gateway for trade and investment into Africa.

Dr Sithanen was Deputy Prime Minister and Minister of Finance of Mauritius between 2005-2010 and Minister of Finance between 1991-1995. Presently he is Chairman and Director of International Financial Services Ltd.

Mauritius: A Jurisdiction of Choice

Mahons is a foreign law firm in Mauritius with headquarters in South Africa and is a member of Meritas Law Firms Worldwide. Mahons has expertise in all types of corporate transactions ranging from the sale of shares, mergers and acquisitions, reorganisations,

fund structures, corporate finance to the establishment of new business ventures. The firm’s client base consists of blue chip companies who are leaders in the mining, education, IT, construction and telecommunication sectors. Miro Dvorak, heads up the Mauritian team and has been involved in a number of “big deals” on the island, including the legal structuring of integrated resort schemes, real estate schemes, shopping malls and other business developments. Miro has, since 2005, been appointed as an international commercial arbitrator with the Permanent Court of Arbitration in Mauritius. The Mauritian office is particularly focussed on collective investment schemes and acts for many multi-national funds, international banks, private equity houses and management companies. In this regard, Mauritius has firmly established itself as Africa’s main international financial services centre and was ranked by the World Bank in its “Doing Business in Africa” survey as the number one country in Africa. Mahons shares some of the reasons why Mauritius is fast becoming a jurisdiction of choice.An investment platform: Mauritius is currently being used as both an inward and outward investment platform for Asian, African and European countries in respect of mineral, agriculture and resource investments and it has the effective commercial and legal infrastructure required to support the development of a global network. Mauritius also has a number of double taxation agreements and a listing on the OECD list of jurisdictions that have substantially implemented the internationally agreed tax standard. Freedom of choice: The hybrid legal system which exists in Mauritius combines both the civil and common law practices. The legal system is governed by both the French Code Napoléon and British law. Mauritius has an independent Judiciary with the highest appeal court being the Privy Council. There is also a locally established Permanent Court of Arbitration, which offers a dispute procedure and forum to all economic entities, either domestic or offshore/foreign. The Rules are based on either those of the International Chamber of Commerce, or the United Nations. Mauritius is a signatory to the 1958 New York Convention on Recognition and Enforcement of Foreign Arbitral Awards, which allows for any award to be made an order of court and to be

enforceable in foreign jurisdictions. Section 181(2) the Mauritian Companies Act, number 15 of 2001, specifically entitles any Mauritian company (which would include an offshore company) to conclude any agreement and to be bound by any foreign law of choice. Contracting parties are free to choose their contracting law (whether the laws of the United Kingdom or otherwise), and also have the choice to have any dispute resolved in any alternative dispute forum such as the Permanent Court of Arbitration. Variety: Mauritius offers a number of different forms of business including, albeit not limited to, a Global Business Category 1 or Category 2 Company (private, public, limited life or partnership), protected cell company, trusts and more recently, new business vehicles such as limited partnerships, foundations and private occupational pensions, further enhancing the jurisdiction’s product offering. Mauritius GBC1 companies are governed by the Mauritian Companies Act 2001 and regulated by the Mauritius Financial Services Commission. They are subject to compliance and reporting regimes similar to those of UK companies. Under Mauritian company law, there is no minimum or maximum share capital and shares can be issued for consideration other than cash. Furthermore, there are no restrictions on rights attaching to shares or on foreign entities or individuals holding shares in a company in Mauritius. However, the Prime Minister’s approval is required for foreign shareholders holding immoveable property or long-term leases of immovable property. GBC1 and GBC2 companies must use a management company for incorporation and the keeping of records of the company at a registered office in Mauritius. Investors have the benefit of a wide variety of well-known management companies to choose from in Mauritius.Economic benefits: Mauritius is a low tax jurisdiction with uncomplicated and favourable tax legislation (for example, all income earned from overseas by an individual resident in Mauritius is only taxable to the extent it is remitted to Mauritius). A Global Business Category 1 Company with tax residency is subject to: a maximum tax rate of 15%, subject to an automatic deemed credit of 80%, reducing corporate taxes to an effective maximum rate of 3%; no capital gains, dividend and/or inheritance tax; and no withholding tax on dividends, interest and/or royalties. Mauritius also has the advantage of an established and reputable banking infrastructure including; Investec Bank, Standard Bank (Mauritius) Ltd, Standard Chartered Bank, Barclays Bank and HSBC. The Government has ensured that doing business in and from Mauritius is simple and efficient and complies with best practices in terms of transparency, good governance and ethics.

Miro Dvorak, Partner at Mahons

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Green Vision Mauritius adopts a model of sustainable development to take the economy forward.

As a Small Island Developing State (SIDS), Mauritius is characterised by inherent vulner-abilities which arise from its small size, iso-lation from major markets, narrow resource base, and proneness to natural disasters and weak capacity to face economic, social and

environmental disasters. Land is particularly a scarce resource in Mauritius and is thus put under severe pressure from compet-ing demands for agricultural use, urban and industrial develop-ment and tourism development. In addition, there is a tendency to overuse our limited natural resources as the country is heading full swing in its economic development, thus causing premature deple-tion. Our watersheds are also relatively small and supplies of fresh water are constantly threatened. Mauritius is particularly vulnerable to the impacts of climate change and sea-level rise. There are high risks of freshwater resource contamination by salt intrusion from the sea; extreme weather events such as intense and heavy pre-cipitation cause floods and disruption in existing weather patterns thereby impacting our agriculture. This already indicates the chal-lenges of Mauritius in terms of ensuring sustained development for the welfare of each and every one. It is clear that we have no other option than to adopt sustainable development as the one and only model of development. Sustainable development is not a choice for us, but rather a necessity to ensure that the tenets of the welfare state upon which Mauritius has managed to build a strong nation continues to prosper and that we are the winners on the economic, social and environmental fronts. In 2008 the Prime Minister, Dr. the Hon. N. Ramgoolam introduced the Maurice Ile Durable project (MID) and since then other initiatives have been undertaken for the development of a national strategy for sustainable development. While the initial thrust of the MID project was to minimise our dependency on fossil fuels with a target of 35% autonomy by the year 2025 through increased utilisation of renewable energy and a more efficient use of energy in general, the concept was widened in 2010 to include all aspects of the economic model, society and the environment that are considered to be pivotal in the quest for a sustainable Mauritius. The new process now covers the 5 E’s of the MID project, namely Energy, Environment, Education, Employment and Equity.Energy: The Government has taken a series of actions to reduce energy consumption and to promote energy efficiency and use of renewable energy. The Energy Strategy targets to achieve 35% self-sufficiency in terms of electricity supply by 2025, through a progressive increase in the use of renewable energies. The provision of grants for the purchase of solar water heaters and the distribution of Compact Fluorescent Lamps (CFLs) at subsidised prices are two concrete examples. Environment: The Environment Protection Act makes provision for coastal management, disaster management, environmental

impact assessment and enforcement based on Precautionary and Polluter Pays Principles. Under the National Environment Strategies, a number of projects have been undertaken in order to address critical environmental issues namely, a study on Coastal Erosion in Mauritius in 2003, a study on Environmentally Sensitive Areas (ESAs) in 2010, the elaboration of an Integrated Coastal Zone Management Framework (ICZM) in 2010, amongst others. Education: The Education aspect of the MID project has two distinctive components. The first is the need for education to facilitate the adoption of sustainability as part of the Mauritian national identity. The second is to ensure that formal, non-formal and informal education channels are sustainable, in so far as they are inclusive and recognise the skills and abilities of each individual. The MID Education Policies will include improved access to education thus reducing poverty through life-long learning and employment opportunities for all Mauritians. One of the measures which has contributed significantly to the success of Mauritius on the social and economic fronts, is free education. Employment: The economy of Mauritius has undergone remarkable development in improving the standard of living of the population. However, Mauritius has now reached a point where it cannot forego sustainability in exchange for economic growth. Further socio-economic development is dependent on green growth – i.e. Economic development that is sustainable and not wholly consumption-based. With appropriate new regulations, legislation and incentives, the MID project will go beyond the greening of the economy to boost efficiency and international competitiveness. The MID project is the central platform for developing new, and transforming existing economic sectors to promote green job creation and competitiveness. Equity: Equity is a cornerstone of the MID project because for future development to be sustainable, it is essential for our small and interdependent society to promote equal opportunities and access to all. Free education, free health care services, universal old age pension, assistance to vulnerable groups, are all examples of social aids to the nation. Government has also created new structures to encourage the private sector to collaborate in societal projects through Corporate Social Responsibility. The Mauritian Government is investing huge amounts of funds in this project but it will be of no avail if the population does not respond positively. It serves no purpose investing massively in renewable energy if consumers still don’t care about the way electricity is being used at home. The same applies to water consumption and to waste disposal. Education is going to play an important part in translating the MID concept into reality and sensitization programmes will be launched soon. My continued message to Mauritians is very simple: let’s put into practice John Kennedy’s vision and his well-known saying: “Ask not what your country can do for you but what you can do for your country.”

By: Hon. Devanand VirahsawmyGOSK, FCCAMinister of Environment & Sustainable Development

11

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