Banker Africa sat down with Charles Cartier, Chairman of the Economic Development Board (EDB) of Mauritius to discuss the inception of the EDB and the role the country has to play in the African financial landscape
What were the factors that led to the setting up of the Economic Development Board of Mauritius?
In the current global context, whereby economic conditions are mercurial and increased competitivity in markets is becoming ever tighter, a rethink of our economic strategy was essential. As such, the establishment of the Economic Development Board (EDB) is one of the key measures announced by the Prime Minister and Minister of Finance during the Budget Speech 2017/2018, with the aim to ensure greater effectiveness in economic policy formulation for the next 15 years.
The EDB was born from the merger of three government promotion agencies namely, the Board of Investment (BOI), the Financial Services Promotion Agency (FSPA) and Enterprise Mauritius (EM). It was rightly decided that the country needed coordinated actions to consolidate its brand image and that available resources could be combined and optimised within a more coherent framework to create greater synergies. There is high need for dynamic planning, structured policy advocacy and focused promotional trade and export activities to chart course to high performance.
The setting up of the EDB inscribes itself in a logic of increasing institutional capacity and fostering short, medium and long-term planning to enable the country’s economy to better sail through external and internal challenges.
What are the areas in which Mauritius has been directing its efforts over the last decade to achieve its growth and development objectives?
Mauritius has demonstrated a considerable degree of economic resilience to external shocks since it has achieved national sovereignty in 1968. Mauritius is one of the few countries that can pride itself of not having known any recession since the early 1980’s.
Our ability to adapt and diversify our economy has been highly instrumental in enabling this Mauritian economic miracle. The actual economic ecosystem with a portfolio of established business activities is reflective of our economic diversification and efforts directed over the last decade in driving growth and other development objectives. Manufacturing, tourism, logistics, financial services, ICTBPO, healthcare, wholesale and retail, construction and real estate, professional knowledge intensive business services and agro-industry, all account for a substantial part of our GDP. Mauritius has been striving over the years in consolidating these sectors and responding effectively to the challenges and opportunities within these diverse sectors. Through continuous monitoring, analysis and decisive policy decisions these sectors have maintained their competitiveness despite aggressive global competition.
In recent years, Mauritius has shown tremendous capacity to innovate and grasp opportunities in new economic segments. The Government has been directing efforts in additional sectors showing appreciable progress and has created the right ecosystem for these sectors to emerge, thus fostering further diversification of our economy. Hence, the EDB has an instrumental role to drive the strategic planning and ensure that the country enters into its next stage of development to become a high-income economy. For instance, we are leveraging on one of our largest asset bases which is our Exclusive Economic Zone (EEZ) of 1.96 million square kilometres, representing approximately 1,000 times our land area. The ocean economy has a huge potential to tap in going forward. Through a successive number of measures and the structuring of the right regulatory framework, the ocean economy is taking new dimensions as a game-changing industry.
In two years, the country has structured a national fishing fleet and has incepted exploration of hydrocarbons in our EEZ. As a consequence of these measures, companies in marine finance have been attracted to our shores, export revenues from aquaculture projects have drastically increased and the roadmap for a niche marine biotechnology industry have been drawn. As a matter of fact, from a production of 500 tonnes in 2014, aquaculture now contributes to 1,500 tonnes of fish produced annually and the project pipeline is huge.
The financial services sector is a major component of the Mauritian economy, contributing to 12.1 per cent of the GDP, but however faces various challenges with changing global requirements and standards on taxation. Accordingly, what is Mauritius doing to address these challenges?
The success of the financial sector, it must be conceded, has been driven to a large extent by the dynamism of the offshore segment. However, the treaty-based model for the sector cannot be sustained anymore. In line with the vision of the Government, the various stakeholders are working together to position Mauritius as a more substance-based International Financial Centre (IFC) for the Sub Saharan region. A blueprint for the Mauritius IFC is being elaborated and will focus on the vision for the sector over the next 10 years.
The blueprint will also take on board international requirements with regards to taxation, without undermining our competitiveness as a compliant, robust and transparent jurisdiction. It is noteworthy that new segments have been introduced in 2016 to expand the range of services offered by the Mauritius IFC. These include investment banking, global legal advisory services, global headquarters administration, global treasury activities, overseas family offices, a new scheme for asset and fund managers, among others. These aim at raising the Mauritius IFC towards greater sophistication, value addition and competitive offerings. The setting up of a fintech association will also enhance the positioning of Mauritius as a regional fintech hub.
Talking about fintech, how is Mauritius embracing the fintech revolution?
In this digital age, new technology is complementing the functioning of the global economy. Fintech will certainly play a major role in the ever-changing financial landscape. The sector is growing at an exponential rate of 82 per cent annually, with inflows exceeding $12 billion transiting through the fintech investment markets, providing innovative and disruptive solutions to enhance personal and business finance.
Global investment in fintech ventures tripled to $12.21 billion in 2014, clearly signifying that the digital revolution has arrived in the financial services sector. With our ICT capabilities and a reputed financial sector, Mauritius is well positioned to be the regional fintech hub and to leverage on the growing demand for such services like mobile payment, remittances, robot financial advisory, insurance, etc. It is noteworthy to highlight that based on its intrinsic unique selling proposition a number of international IT and fintech companies have already implemented their businesses in Mauritius. To further the establishment of a full-fledged sector, the Government has taken various measures to embrace innovation and to create the right ecosystem for start-ups and fintech companies to evolve. Such initiatives include the setting up of a regional fintech association with strong collaboration between the Government, private sector and world-renowned experts. The aim is to incubate and accelerate the emergence of fintech start-ups; structure and implement fintech projects in local and African banking and non-banking structures; encourage the establishment of major fintech companies in Mauritius; and further the positioning of Mauritian companies as fintech technology providers to the African continent.
The setting up of the Regulatory Sandbox Licence (RSL) has been another key measure in furthering the Mauritian fintech initiative. Fintech in a nutshell can be defined as a superposition of simple and complex financial tools on information and technology systems. Jurisdictions wishing to enter the league of play in fintech thereby requires stringent, yet adaptable and tailor made regulatory structures to accommodate such projects. Mauritius has been a regional pioneer in taking forward such an initiative. The Financial Services Commission (FSC) is, furthermore, chairing a technical committee to structure permanent legislations with regard to fintech development in Mauritius. The will and converging initiatives of both the private sector and public institutions is a clear signal of the importance of fintech for Mauritius.
How can the EDB be instrumental in driving technological innovation in the banking sector?
The EDB is the window of Mauritius in terms of investments and company-channelled technology transfer. Furthermore, by being at the forefront of such initiatives like the RSL, the Innovation Box, the Innovator Permit, among others, the EDB has been thriving to develop the right ecosystem to encourage innovation across all sectors of the economy. The success for a small island like Mauritius, far from major markets to sustain appreciable growth, will highly depend on technological adoption and the banking sector is not at rest.
Banks will need to come up with new tools facilitating mobile and internet-based payments, facilitate cheque deposits and streamlining AML/KYC procedures, among others. These will be rendered possible though innovation and technology. In addition, the EDB is playing a pivotal role in establishing the most efficient regulatory and institutional framework to foster innovation. Through several workshops, business delegations and information sessions, the EDB continues to create awareness on new technology-based business opportunities for banks. The fintech association will play a key role in creating strategic alliances and support member institutions to improve their capacity through innovation and technological capture.
Are there any specific technologies that you think will play a transformative role in the Mauritian banking sector?
The banking sector is certainly experiencing major technological breakthroughs and the sector has benefited from a promising trend in this respect. New trends in technology are changing the way we are connecting with each other, as well as with banks. Emerging technologies like application programming interface (API) and artificial intelligence (AI) focusing on security systems and mobile technology have increased the convenience and the userfriendliness of online bank interfaces. At the same time, banking transactions are made faster. Mobile Apps now allow banks’ customers to have access to valueadded services like using their mobile phone to access their bank accounts and effect fast payments. Furthermore, blockchain-backed applications will open major new development avenues namely in improving security, upscaling AML/KYC activities, among others.
How is Mauritius positioning itself as a platform for investment into Africa?
I must say, along with our appealing landscapes and warmth and hospitality of our people, we stand proudly today as an example of economic success in Africa. Over the years, Mauritius as an IFC has established itself as a pioneer in cross-border investments and finance, offering an unparalleled, well-regulated, and transparent platform in the African continent. By promoting Mauritius as a highly sophisticated and stable jurisdiction and as a stepping stone to the growing African market, Mauritius is consolidating its Africa strategy. As part of its outward investment strategy to increase the economic space of Mauritius, the Government is also embarking on the development of Special Economic Zone (SEZ) projects in selected African countries that will open up investment opportunities. Our island offers full protection of foreign investments through its network of investment promotion and protection agreements (IPPAs) with African countries and consolidate itself as the preferential market access in the continent. It has to be noted that the African strategy of the Mauritian Government, aims at further consolidating its relations with the other African countries, while boasting socio-economic developmental projects across the continent. For instance, in 2014, total inbound investments in Africa stood at $54 billion, out of which 36 per cent went through Mauritius, which equals to $19.4 billion. Moreover, the Africa-Asia air corridor, launched in 2016 positions the Mauritius IFC as an access centre for existing and emerging markets in Africa and Asia. Our focus on the air corridor, aims at further facilitating the movement of people, capital and goods between Asia and Africa. Finally, it has to be noted that, Mauritius is the only IFC in the region which is a member of all the major African Eastern and Southern Africa regional organisations, such as the African Union, Southern African Development Community (SADC), Common Market for Eastern and Southern Africa (COMESA), and the Indian Ocean Commission (IOC).
Brain drain is a major issue for Mauritius and other developing countries. What are the national efforts to curb this phenomenon, retain talents and attract the Mauritian academic diaspora? Brain drain is an issue that many African countries are currently facing. Losing the smart professionals can indeed be a detrimental factor that impede in the economic development of a country. We recognise the importance of the Mauritian academic diaspora as a useful asset for Mauritius and this is translated by the ambition of the government to position the country as premier education hub for Africa. The EDB has the vital role to optimise human competencies and expertise. To achieve this core objective, we are successfully encouraging international universities to set up their campuses in Mauritius. This initiative will be instrumental in providing quality education to Mauritian students and empower our people to embrace new types of jobs requiring new set of skills. Access to quality education will increase their competitive edge and contribute further to the national economic development. We strongly believe that the Mauritian diaspora can be a valuable asset to the country. In this regard, the EDB introduced the Mauritian Diaspora Scheme which aims to attract members of the Mauritian diaspora to return to their homeland and participate actively in the economic development of the country.
How can the EDB position itself to embrace upcoming global challenges? Over the years, we have noted that our strength lies in our nature to adapt to changes and to seize opportunities while constantly questioning ourselves. Though, we cannot predict the future, we can always be well prepared through strong measures and by strengthening our institutions. With the advent of the EDB, we embark on a new journey to implement strong economic measures that will foster inclusive economic growth and productivity for the lasting prosperity of our people.