“Embracing a brighter future together as a nation”

Further to the announcement of the Mauritius National Budget 2019-2020, former Managing Director of Sunibel Corporate Services, shares his views about the budgetary measures for the Financial Services sector.

Read the transcript below.

Click here to read our Budget Brief 2019-2020.

Click here to read our Budget Brief 2022-2023.

“Embracing a brighter future together as a nation”

Those who were expecting fundamental changes being announced by the Mauritius National Budget 2019-2020 will appreciate that it is one of continuity, in line with last year’s Budget.

The Financial Services sector represents one of the certainties for achieving sustained economic growth and high value employment opportunities for the years to come. Let us take a long-term view and look at the enabling conditions that will reinforce the position of Mauritius as a leading International Finance Centre (IFC) for the depth of services provided. Our captive market for providing financial services is undoubtedly the African continent. Among the catalysts we count competences (primordial in such an industry; nothing is done without the right skills set at all levels), modern infrastructure, air connectivity (to facilitate business), and a sound and well-though business and regulatory framework of international standard.

The budget speech 2019-2020 has many positive propositions that will provide the enabling framework for the Financial Services sector to grow and develop further. The country is OECD compliant in terms of exchange of information, harmful tax practices and AML/CFT standards. Mauritius has embarked on various projects to modernise its infrastructure over the years and this budget further consolidates the vision of providing the country with the right infrastructure. Although finer details are expected, any action to boost the Fund Administration and Fund Management business out of Mauritius is a welcome move. Indeed, Mauritius must position itself as a leader in this business segment with Private Equity deals in Africa averaging the USD 4 billion in recent years.

On one hand, we notice the introduction of new products for specific activities. These activities include:

• green finance – investing in sustainable development projects;
• e-commerce operators – e-commerce has revolutionised the way buyers and sellers interact across the world;
• peer-to-peer lending – lending money to individuals or businesses through online services that match lenders with borrowers;
• crowd funding – project funding by raising small amounts of money from a large number of people, most frequently through the Internet; and
• Real Estate Investment Trust – which generally operates by generating income from real estate.

To create some traction and demand, some activities (which require obtaining the appropriate licences) will benefit from an initial tax holiday, such as the e-commerce licence for instance.

On the other hand, existing regimes for Special Purpose Funds will be revamped and the Partial Exemption Regime will be extended to other activities whilst taking into account the important substance requirements. One must appreciate the role of Mauritius being the inbound and outbound platform for investment and provision of services, connecting businesses across the world.

If the country is to fulfil its potential to become a Wealth Management hub for Africa in the coming years, we expect more clarity and certainty concerning the ‘umbrella licence’ for wealth management activities. It is difficult for a service provider to be controlled by two regulators (BoM and FSC) for the same activity. Also, the regulators will adopt more efficient ways of processing applications in order to reduce turnaround times.

Two critical ingredients the budget has not put enough emphasis on are:

1. Attracting the right talents and brains to Mauritius (the diaspora and expats) to further develop the IFC, such as Singapore and the UAE. Otherwise, the objectives set in the financial blueprint will be hardly achievable; and
2. Connectivity, which has to be improved between the Mauritius and the African continent.

The ageing population and social welfare program are always high on the agenda. However, one thing is certain: public debt should not finance social benefits; only sustained economic growth should – and the Financial Services sector, along with the other sectors, are capable of contributing to it.

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