Statement by Dr the Hon. Arvin BOOLELL, Minister of Foreign Affairs
and
Regional Integration and International Trade at the CFASM Gala Dinner on
Tuesday 05 November 2013 at 18 30 hrs to 22 00 hrs at Hilton Hotel, Flic-en-Flac
MrRandhir Mannick, President of Chartered Financial Analyst Society, Mauritius
Mr. Nitin Mehta, Managing Director for Europe, Middle-East and Africa CFA Institute
Dr. Rama Sithanen, former Minister of Finance and Chairman, International Financial
Services
Invited Guests,
Ladies and Gentlemen,
Good Evening
Frankly, it is not my intention to spoil this Gala dinner and the nice celebration mood
with a long speech.
I would like to thank the President and Members of CFASM for inviting me to this Gala
Dinner on the occasion of the 10th Anniversary of the CFA Society, Mauritius and to
convey my congratulations to the CFA Society Mauritius and to wish it great success in
future.
The topic of the “Future of Finance” project is indeed a challenging and ambitious one.
Both Mr. Nitin Mehta and Dr. Sithanen have already touched on the various aspects of
the subject. This has made my task relatively easy.
Ladies and Gentlemen,
I have been asked to speak on Mauritius as a future gateway to Africa. To speak about
the future, we need, in my view, to put it in a context
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The financial melt-down of 2008 broke the myth of an efficient financial and banking
system that is self-regulating, self-correcting, built-in control and risk management.
.Options derivatives, and leverage had become key to prosperity. Long-term investment
in the productive sectors of the economy was exploited by the search of quick profits. It
showed that there was a limit to the virtues of free market and laissez-faire, but there
was no limit to greed.
It also demonstrated that world governance did not keep pace with the onslaught of
globalization driven by unbridled liberalization and re-regulation.
The lesson is that there is a recognized need for a more active role of a strengthened
regulatory system that will infuse and re-establish trust and confidence in the system,
and the challenge would be to ensure greater balance between the interests of all
stakeholders. This will require a new breed of managers, a new control system, a selfrestraint and a new form of education and training by institutions like CFA.
Ladies and Gentlemen,
Africa has generally escaped from the worst effect of the financial and banking crises.
This is mostly because most African countries were not too heavily connected with the
financial system dominated by the countries of Europe and U.S.
Africa is currently undergoing a silent economic revolution and its growth is expected to
be sustainable as it is internally-driven supported by a burgeoning middle-class
estimated to reach 600 million out of a population of 1.8 billion by 2050. Most of the
fastest growing economies in the world to-day are African. More importantly, unlike the
situation in the 1970s when the economic growth was mainly driven by the commodity
booms, now they are getting their economic fundamentals right and have shown great
resilience to the recent financial and banking crises. Indeed, African countries are
aiming at a structural transformation of their economies.
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According to the IMF Sub-Saharan Outlook report, Africa is expected to grow by 5.4% in
2013 and 5.7% in 2014. This will continue to give a boost to the financial services sector
with more capital inflows and technology. Specialized financial services providers will
have to meet the growing demand of the various sectors. This will create vast
opportunities to our services sector.
Over the last two decades or so the financial services sector have exploded and grown
exponentially. Financial services trade to-day runs into trillion of dollars. The sector is
still growing albeit moderately, notwithstanding the financial and banking crises. Africa,
as the next economic growth pole, will be the main driver in this sector because its
economic development needs are huge as it has to empower the bottom one billion of
its population pyramid by 2050.
In Africa, the services sector represents 58% of its GDP, outperforming China with 43%,
and even India with 56%. But what is more interesting is that, this is a sector where
Africa, “as a group” enjoys a surplus because it exports more services than it imports.
Rising incomes are now putting financial services within the reach of many Africans for
the first time.
The financial services sector is growing pretty fast judging from the inflows of foreign
direct investment which is expected to increase to $ 150 billion by 2015. Africa will be
the next driver of the financial services sectors because, as I hinted earlier, its needs
are phenomenal and it has now a growing absorption capacity. This may create
enormous opportunities for jurisdictions such as Mauritius to act as safe and reliable
conduits for the structuring of such investments into the region.
Based on its advanced banking system, conducive business environment and local pool
of finance professionals, Mauritius is, indeed, emerging as an attractive platform for
investment people to pursue opportunities across a variety of sectors in Africa.
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What we need to do is to build on these foundations and add value so as to facilitate the
large scale entry of our private sector into the African market, and secondly, to promote
the use of the island as a platform from which foreign business operators can explore
opportunities across Africa. Mauritius has certain strengths that may allow us to exploit
the opportunities in a more coherent, coordinated and aggressive manner. My Ministry
has recently set up an inter-agency Committee to look into this.
Mauritius offers a conducive, efficient and reliable platform for structuring investments to
Africa. It has extensive Investment Promotion and Protection Agreements, a modern
legal and corporate infrastructure, a pool of professionals with in-depth knowledge and
a strategic location between Asia, Africa and Australia.
Doing business in Africa is still a high risk proposition and IPPAs in particular can
mitigate some of these risks and provide investors with the assurance and guarantee
that their investment will be protected. Our DTTAs and IPPAs network, which we are
seeking to expand, can play an important role in promoting and facilitating cross border
investments and help Mauritius itself as a gateway for investment into Africa.
SADC and COMESA membership facilitates the entry of the Mauritian private sector
into these regions. According to available figures, more than 60% of new entities set up
in the financial sector so far in 2013 are meant to mobilize and direct investment into
Africa. The recent opening of the COMESA PTA Bank regional Office and the African
Development Bank partnering with our local banks for investment into Africa enhances
the credibility of our jurisdiction.
The Government has an ambitious project to establish Mauritius as an International
Arbitration Centre which will be the first of its kind in the region with a Permanent
Representative from The Hague-based Permanent Court of Arbitration. Our aim is to
offer a modern and attractive jurisdiction for international arbitration which is now
acknowledged as an essential corollary of cross-border investment flows.
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In 2011, Mauritius signed a joint venture agreement with the London Court of
International Arbitration, for the creation of a modern international arbitration centre. The
Mauritian International Arbitration Centre is now fully operational. We are encouraged
that our efforts are starting to bear fruit judging from the increasing number of parties
adopting Mauritian arbitration clauses in their contracts. The hosting of the 2016
Congress of the International Council for Commercial Arbitration, which will attract the
world’s prominent arbitration practitioners, will be an opportunity to showcase what
Mauritius can offer in this regard.
To unleash the competitive dynamics of our region from which Mauritius can benefit,
good governance, democracy and the rule of law must prevail. Mauritius is actively
involved in promoting these values through its participation in the UN Human Rights
Council, the APRM and the regional peace and stability organs
Some African countries are already making significant progress to move up the World
Bank Ease of Doing Business. Mauritius is in a comfortable position with its 19 th rank.
Through Peer-to-Peer learning, best practices and the sharing of knowledge and
experience as well as the quick implementation of an ambitious Business Facilitation
Programme we can accelerate the process. Mauritius is engaged in such a process with
other four like-minded and reform-oriented countries under the Accelerated Programme
for Economic Integration (APEI).
There is a feeling that Mauritius has not fully exploited the opportunities which (SADC
and COMESA) regional organisations present. Having access to these markets is one
thing, but this needs to be followed up with a coherent strategy to exploit these
opportunities.
We are aware of the difficulties that we encounter to fully exploit the opportunities that
an emerging Africa represents, and just to name of few:
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Logistics hindrances: Africa’s weak infrastructure presents a major challenge for
business operators for moving goods and services across borders. For Mauritius
connectivity, particularly lead times and high freight costs are a big concern for
exporters of goods to the region. It affects our competitiveness. In the services
sector, the inadequacy of air services poses a serious problem which needs to be
addressed. There is no quick fix or a miracle solution. Regional cooperation is one
of the options. Both the IOC and the COMESA-EAC-SADC Tripartite process are
engaged on the matter.
For the financial services sector, some feel there is a need to groom and equip a
new generation of middle and top management officers with skills to do business
effectively in the region. We are lucky that Mauritius has a strong entrepreneurial
culture. However, entrepreneurship needs to be complemented by strong
managerial skills to sustain business performance particularly when venturing into
new sectors and markets over the long-term.
In this regard, institutions like CFA, can play an important role. It may consider
inviting successful operators in Africa to run a series of seminars/courses on doing
business in the region.
Moreover, the large Mauritian diaspora of entrepreneurs and business people in
Africa could be better targeted. This is an area where their insights and ground
knowledge could be leveraged on to better penetrate the African markets and
establish a foot-hole.
We are conscious of the important role our diplomatic and consular presence in
Africa can play in building economic and business relationships. We are therefore
seeking to expand our diplomatic footprint on the continent, including two way high
level visits. The recent visit of the Gabonese delegation led by the President of
Gabon also fits into this strategy.
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Our financial services sector has so far developed successfully. It contributes about
10% to our GDP and directly employs more than 15000 people who are mostly
educated. It has emerged as a leading International Financial Centre (IFC) for
Asian and more recently African investment.
The sector has now reached a crossroads and, in my view, needs to diversify
vertically (i.e. into the provision of higher value added financial products and
services) both in terms of markets and our products, (including by adding
substance).
Strengthening the sector also involves activities such as research, intelligence
gathering, sensitization and trade promotion. Some of our existing organizations are
doing it. We need a more co-ordinated, coherent and holistic approach.
The development of the necessary human skills will be particularly crucial, the
provision of high end financial services required complex skills sets for which we
may need to bridge gaps. Ireland and Singapore faced similar challenges in the
past and both countries focused on attracting foreign investment and technologies
to deepen their industrial systems and move up the value chain.
Ladies and Gentlemen,
The geo-strategic and geo-political situation in Africa are undergoing profound
transformations. Its economic importance has increased with a shift in poles of
economic power and the emergence of the BRICS. This will require a constant rethink and adjustment of our policy and strategy towards Africa which is our natural
partner.
Already 20% of our trade is now with Africa and is increasing. More than 70
Mauritian companies already present and doing business in Africa. We need to do
more, particularly in the services sector if we are to attain the stated objective of
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joining the high-income category of countries capable of providing high quality and
high salary jobs to our young and educated people.
With the support of the Commonwealth Secretariat, my Ministry has commissioned
a study being undertaken by Nathan Associates (UK). The study is expected to
provide three deliverables:

A Look Africa Policy that will clearly articulate the vision of the Government
for Mauritius’ future trade and investment linkages with Africa.

A Global Africa Hub Strategy with emphasis on action and the practical steps
needed to be taken to realize the policy/vision; and

A marketing Plan for the financial sector.. It will specifically develop an action
plan for the financial sector to take advantage of the emerging opportunities
particularly the provision of higher value added financial products and
services to the region.
The study may thus also contribute to strengthening our financial services sector and
thus contribute towards the establishment of a modern International Financial Services
Centre of international repute as a sound, well regulated and respected centre which, in
my view, is the most important guarantee for its future growth and prosperity
At the same time, I invite our operators to continually embrace innovative strategies so
as to shape products for the African markets to fit consumers’ rising financial
sophistication needs. We all agree that while not without challenges, Africa’s financial
services sector presents compelling opportunities. It behoves us, as Africans, to seize
them with a particular African approach that makes a difference.
I thank you for your attention and patience.
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