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An Overview of the Mauritian Banking System

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An Overview of the Mauritian Banking System

Posted by: Órama Corporate Services
Category: News

Mauritius has a strong and well-established banking system, with a mix of international and local players, offering a wide range of services encompassing cross-border corporate banking, international banking, private banking and trade finance among others. The banking sector in Mauritius is playing an increasing role in providing tailored solutions in regional and international markets.

The island nation is well known for its ease of doing business, where it is ranked 1st in Africa and 13th globally in the World Bank’s Doing Business Report 2020, while the UNCTAD World Investment Report 2020 highlights that among Small Island Developing States (SIDS) Mauritius was among the top 5 host economies for FDI flows in 2019, with flows amounting to USD 0.5 billion (representing an increase of 27.1% on the previous year) which confirms its leading position in facilitating international investment flows.

According to the Capital Economics Report, Foreign Direct Investment (FDI) to the tune of USD 82 billion into mainland Africa is mediated by Mauritius creating 4.2 million jobs in the continent. The country has a well-developed financial sector, with a range of banking and financial services available to clients.

Mauritius today is known as the gate way to Africa, it has forged a reputation as a safe, trusted, and competitive financial centre supported by strong institutional arrangements and good governance. This is evident with the growing relevance of the Mauritius International Financial Centre (MIFC) serving as a conduit for driving investment to Africa. Today, more than 450 private equity funds are domiciled in the Mauritius IFC and investing in the African continent. As of June 2021, nearly USD 40 billion investments directed to Africa were structured through Mauritius.

Moreover, the country has earned international recognition and is on the OECD “whitelist of jurisdictions that have substantially implemented internationally agreed tax standards and has also been adhering to compliance regulations. Mauritius is seen as a model of stability and economic prosperity in the region and envisions to consolidate its position as a regional platform.

Global Business remains the backbone of the Financial Services sector and Mauritius has forged a reputation for economic substance. The Global Business sector on the island offers convenience, fiscal efficiency and risk mitigation for companies engaged in international operations such as Foreign Direct Investment and Foreign Institutional Investment while leveraging growth and cross border activities.

The Global Business sector in Mauritius is providing sophisticated services like specialized collective investment schemes, investment dealership, close-ended funds and global collective investment schemes. These services are offered by management companies like Órama Corporate Services in collaboration with recommended banks or banks of choice by the clients.

Mauritius is also said to be home to a thriving FinTech ecosystem, with new and innovative players coming into the market based on our forward-looking framework, and establishing operations in areas such as mobile payments, Security Token Trading systems, Regulatory Sandbox Licenses and Peer-to-Peer lending.

Investors are welcomed into a dynamic securities market which offers world class trading facilities. The Stock Exchange of Mauritius is one of the pioneers in sustainability in the African continent and is considered as the second largest market, offering dynamic debt and equity market, trading of fixed interest securities and equity through investment dealers. It has played an important part by opening its activities to debt securities, ETFs, Eurobonds and structured products, offering a range of possibilities to investors.

The island is widely recognised by both fund managers and investors and is commonly used for structuring cross-border and international investments. It is an attractive domicile for investments because it offers a flexible and cost-effective regime within a robust and regulatory framework, political stability, a well-developed infrastructure, a beneficial time zone, the presence of wider ecosystem of banks and professional services firms and the availability of skilled professionals.

Private Wealth has also been a key area for growth of the Mauritius IFC, with a number of solutions available. It offers various options of succession planning mainly through trusts and foundations. Both legal forms allow for the creation of customised solutions that can accommodate diverse personal and business needs, ranging from succession planning to estate management. The Overseas Family Scheme was also introduced in 2016 and the licence caters for the domiciliation of High-Net-Worth Single-family offices and multi-family offices, which can hold and manage international assets and funds.

Mauritius places a strong premium on good governance, where the island has cemented its leading position in Africa by being ranked top in Africa by the Mo Ibrahim Index on African Governance (IIAG) for each consecutive year for over a decade.

Mauritius also offers legal certainty to investors through its hybrid legal system (which the Privy Council of the UK is the highest Court of Appeal) and the availability of dispute resolution mechanisms via the Mauritius International Arbitration Centre (MIAC) and the Mauritius Chamber of Commerce and Industry (MCCI) Mediation and Arbitration Centre (MARC). Investors can also avail of a wide network of Investment Promotion and Protection Agreements (IPPAs) and Double Tax Avoidance Agreements (DTAAs).

Mauritius is strongly committed to ensuring tax transparency. It was the first country in Africa to sign the FATCA (Foreign Account Tax Compliance Act) and it is also recognised as cooperating with the EU on tax good governance, where it has implemented all of its commitments. Mauritius is also committed to full compliance with the recommendations of the Financial Action Task Force in relation to money laundering and terrorism financing, and is actively working towards achieving this goal, in dialogue with the relevant international authorities.

Beyond this, Mauritius offers political stability, a safe, secure and peaceful multicultural environment to live in, an educated and bilingual workforce, a conducive time zone for international business (GMT +4), tropical climate and an attractive lifestyle.

The destiny of Mauritius is inextricably linked to the future development of Africa. As such, Mauritius must avail itself of its attributes and experience to tap on the opportunities unfolding and shore up its position as the platform to facilitate business and trade for Africa.