Wednesday, January 19, 2011

Mauritius – Gateway to Africa/Asia (Extract from Asia Today International Magazine)

MAURITIUS is drawing on long-established links with India and Africa to position itself as a natural conduit for exponential growth in the emerging Africa and Asia trade corridor …

PORT LOUIS, Mauritius – While just two percent of total Chinese trade in 2004 was with Africa, there has been a huge surge. From a tiny base, Sino-African trade during the 1990s grew by 700 per cent, and, since the first China-Africa Forum in Beijing in 2000, more than 40 trade and investment agreements have been signed.

In raw numbers, Sino-African trade doubled to more than US$20 billion over the four years to the end of 2004, increasing to US$73 billion in 2007. It I now projected to reach US$100 billion in 2010.

China’s demand for energy and resources is driving this growth – and India is now starting to follow, says James Benoit, CEO of Mauritius-based AfrAsia Bank Ltd.

Both countries are using Mauritius as their investment holding company for banking and treasury management jurisdiction, and as a base for key professional staff doing business across Africa, he says.

Benoit points out that Mauritius is long-established as a leading banking intermediary for foreign investment into India, due to close cultural ties with sub-continent and favorable double taxation agreements.

‘Over the past decade, Mauritius has administered more than USD$50 billion in FDI flow to India, and holds about 40 per cent market share of total global FDI inflow to India,’ he says.

Mauritius has developed very strong economic and cultural ties with both Africa and Asia over the years, Benoit told ATI, and is now becoming increasingly well-known and utilized as a trade and financial gateway to these continents. Mauritius was, in fact a founding partner of a number of regional preferential trade areas and political organizations, including COMESA (the Common Market for Eastern and Southern Africa), SADC (the Southern African Development Commission), the Indian Ocean Commission and the African Union.

‘Now, Mauritius is positioning itself for exponential growth in the emerging Africa and Asia trade corridor. It is already a direct beneficiary of these flows and the whole region is on the verge of substantial transformation,’ says Benoit. As just one example, Huawei Technologies, China’s leading supplier of networking and telecommunications, has established a financial centre in Mauritius to provide services to its subsidiaries in the sub-Saharan African region. Huawei has more than 100 branch offices worldwide – and 39 of these are in sub-Saharan Africa.

AfrAsia Bank, Benoit says, is pursuing an ‘audacious’ strategy to tap into the growing trade, investment and capital flows between Africa and Asia that are now increasingly evident. ‘It’s a fascinating time to be a banker in this region,’ says Benoit, a former HSBC Middle East – including three years with HSBC in Mauritius.

‘AfrAsia Bank was among the first to recognize the growth potential of the African Lions in marching the rise of the Asian Tiger economies,’ he says. ‘Much of the Bank’s strategy and growth is coming from our mission to be the primary reference Private and Corporate Bank in the region to facilitate Africa – Asia trade and investment flows.

‘We are setting up capital investment structures in South Africa, India, Singapore and Australia to facilitate money flows into Africa.’

Benoit says that while Asia is a dynamic source of investment, funding and manufacturing, Africa is widely acknowledged as a continent of under-developed potential. Africa has 60 per cent of the world’s uncultivated land- and its GBP is expected to increase by 62.5% by 2020.

AT the “cross-roads” of these two continents, Mauritius is the ideal conduit, says Benoit. It has a comprehensive network of Double Taxation Agreements (DTAs), geographical positioning, a bilingual skilled workforce, and strong cultural ties. In fact, of 35tax treaties so far concluded by Mauritius , 13 are with African countries- including South Africa, Nambia, Senegal, Swaziland, Uganda, Zimbabwe ,Botswana and Tunisia.

As an example of benefits available under these treaties, the Mauritius-India DTA provides a Mauritius resident with complete protection from India capital gains taxation on sale of shares in an Indian company.

Coupled with this extensive network of DTA’s Mauritius has 34 Investment Promotion and Protection Agreements (IPPAs), of which 16 are with African countries. IPPAs are crucial between countries because they are international bilateral agreements with governments, designed to protect and encourage investment overseas, says Benoit Benefits include free repatriation of investment capital and returns, guarantees against expropriation, compensation for losses in case of war, armed conflict or riot and arrangements for the settlement of disputes between investors and the contracting States.

Put together, Benoit believes AfrAsia offers a strong regional economy looking for dynamic capital market and banking solutions to facilitate phenomenal growth.

'A single hotel project in the Maldives or Seychelles can easily reach US 50 million,' he says Infrastructure build out in African countries for mining and oil and gas exploration can total billions. And integrated resort schemes with seaside golf courses and luxury villas being built in Mauritius can bring prices of up to US 20 million for a single house. The diversity of quality projects is only expected to grow deepen.

Benoit describes AfrAsia Bank, which is headquartered in the Mauritius International Financial Serviced Centre, as a boutique bank offering a comprehensive range of financial solutions. We focus on the delivery of integrated banking services to both the local and international markets he says, AfrAsia Bank is a reference point for Corporate and Investment Banking, Private Banking and International Banking Solutions linking Mauritius and the Africa-Asia trade corridor - because Mauritius is closer to these markets.

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