Africa’s markets are teeming with untapped potential, offering investors access to some of the fastest growing economies and industries in the world. From renewable energy and infrastructure to technology and agriculture, the continent’s opportunities are vast but often complex to navigate. Mauritius, with its strategic location, robust financial ecosystem, and investor-friendly regulatory framework, serves as an ideal gateway for entering Africa’s dynamic markets. As a trusted conduit, Mauritius combines stability with connectivity, enabling investors to overcome regional challenges, and foster partnerships that drive sustainable development across the continent.
Africa: opportunities, risks, and opacity
Africa offers a great opportunity to invest in expanding sectors like renewable and alternative power, electronics, communications and media, and software and IT. But while Africa’s markets present opportunities for those looking to access the continent’s potential, these come with higher risks, and investors face a variety of challenges, particularly in southern Africa, Kenya, and Nigeria. The most poignant issues derive from several factors, including regulatory uncertainty, economic instability, and infrastructural deficiencies.
One of the largest barriers to foreign investment in Africa is regulatory risk. South Africa has seen the disinvestment of equities and bonds of more than a trillion rand in the last decade, over unclear regulations, and execution stasis. Investor confidence has also been eroded by political instability and uncertainties which can translate into policy uncertainties with a potential impact on regulatory changes.
Market development has also been hindered by limited knowledge of financial asset investing among local populations. This lack of understanding, combined with regulatory challenges, has further eroded investor confidence in assets, like corporate bonds, and investing in local stock markets.
Infrastructure concerns, and coupled with limited basic systems and services, can paradoxically deter investments in sectors like infrastructure – South Africa, Kenya, and Nigeria are identified as key markets with potential for infrastructure development, but the existing deficiencies deter investment. Cross-border payments are also challenging, with exchange controls in various countries making intra-African trade and investment more complex and costly.
These are further exacerbated by macroeconomic instability, with high unemployment rates, power outages, and the deterioration of state-owned enterprises in counties such as South Africa, posing additional risks for investors. While Africa holds immense potential for investment, the challenges posed by regulatory uncertainty, infrastructural inadequacies, and economic instability create a complex environment for investors.
Accessing Africa’s markets through Mauritius
Mauritius is an outlier when the challenges associated with other African nations are discussed. As one of the oldest democracies in Africa, it has seen continuous political, social, and economic stability since independence. By following the Westminster Principles, it boasts solid democratic institutions, an independent judiciary, and a commitment to social development in terms of health, education, and technology – the right conditions to levitate confidence.
Additionally, Mauritius has an active role in the African Continental Free Trade Area (AfCFTA), a customs union aimed at boosting trade across the continent through the reduction of trade barriers and increase in economic cooperation among African nations.
Mauritius serves as a strategic platform to Africa – leveraging its extensive trade agreements and economic partnerships, and financial infrastructure – backed by a strong economic and regulatory framework. The extensive network of agreements enables trade and investment flows between Mauritius and various African nations, making it an attractive entry point for businesses interested in investing and expanding into the continent, and providing a framework for the safety of funds and investments in Africa.
Mauritius’ international financial centre (Mauritius – IFC)
Mauritius has a best-in-class financial centre, the Mauritius – IFC, which serves as a strategic platform for investing in Africa – leveraging its extensive trade agreements and economic partnerships, and financial infrastructure – backed by a strong economic and regulatory framework. The comprehensive network of agreements enables trade and investment flows between Mauritius and various African nations, making it an attractive entry point for businesses interested in investing and expanding into the continent, and providing a framework for the safety of funds and investments in Africa. The Mauritius – IFC also provides an attractive environment for cross-border investment, wealth management, and corporate structuring and offers an array of financial services and expertise for investing in African markets.
The Economic Development Board (EDB) of Mauritius, in conjunction with support from government initiatives, helps investors streamline their operations. The government has created a favourable investment environment characterised by incentives such as 100% foreign ownership, tax-free dividends, and no capital gains tax – conditions that have attracted increased foreign direct investments (FDIs). According to RMB’s report “Where to Invest in Africa 2024”, Mauritius came second after the Seychelles out of 31 countries in terms of FDIs.
The Government of Mauritius also supports infrastructure development through the growing level of investment flows into Africa, which stands at some USD 49 billion as at 30 June 2024, providing additional opportunities for collaboration with African nations. A recent signing by the Mauritian government of the OECD Multilateral Convention, which aims to prevent tax-base erosion and ensure fair tax practices, has enhanced Mauritius’ reputation further as a dependable financial partner. Outward looking, the government has worked diligently to ensure it meets international standards with reforms – such as the removal of the Foreign Tax Credit regime and the abolition of the Category 2 Global Business Licence – reflecting Mauritius’ commitment to aligning with global best practices in tax regulation and anti-money laundering. These policies have not only enhanced Mauritius’ financial reputation but made it a competitive choice for businesses seeking to operate in Africa without the potential reputational issues associated with tax-avoidance strategies.
Mauritius has three licensed securities exchanges to offer – the Stock Exchange of Mauritius Ltd (SEM), Afrinex Limited and MINDEX limited – overseen by Financial Services Commission (FSC) of Mauritius to ensure they conform with international standards. The Stock Exchange of Mauritius Limited (SEM), with a focus on local capital markets over the last two decades, has been evolving its regulatory and operational framework to broaden its platform and offering, diversifying its product offerings, and attracting new listings across different asset classes. Afrinex Limited is a pan-African focused international securities exchange and offers a bundle of securities including stocks, bonds, equity derivatives, and exchange traded funds – to name a few – listed across the African continent. MINDEX is a fully regulated and insured digital asset eco-system and exchange within Mauritius for Africa for listing, storing and trading of digital assets and is open to development finance Institutions, institutional investors as well as African retail investors.
An economic powerhouse
As the African continent continues to emerge as a global economic hub, the need for reliable and efficient access into its diverse markets has never been so apparent. Mauritius offers investors an enticing mix of stability, strategic location, and financial sophistication, making it an ideal location for unlocking the continent’s vast opportunities. By leveraging its strong regulatory framework, favourable tax treaties, and well-established connections with African nations, Mauritius supports investors in navigating Africa and capitalising on its growth.
