Afsar Ebrahim: “The reasons for the success of a business in Mauritius cannot be replicated in Africa”

1. You recently talked about “waves of growth”…

Our economy has evolved through different cycles. We managed to diversify it from a monoculture to several pillars, including textiles (the Hong Kong wave of investment), tourism and financial services. We are now looking at Seafood Hub, Knowledge Hub, Medical Tourism and BPO (outsourcing) sector. We hope that one of these sectors will emerge as a major pillar, with a substantial contribution to economic growth and job creation. Of course, in each of these sectors, there has been a second level of increased diversification as the country has moved up the value chain.

2. You often refer to “Investment by Mauritius” instead of “Investment through Mauritius”. What does this really mean?

We are familiar with the term “investments in Mauritius”. We have experienced this in different sectors and, recently, through the IRSRES. We excel in the art of “selling” Mauritius. Moreover, with the emergence of the country as a financial center "with substance" and renown, Mauritius has been used as a platform to benefit from the network of tax agreements and to be a welcoming destination for firms wishing to invest in Asia, mainly in India. And recently as a platform for investments in Africa. These are “investments through Mauritius”.

Tax treaties aside, Mauritius has a strong argument with its investment promotion and protection agreements. This provides an additional level of protection for outside investments. Now is the time to think about 'Mauritius Investments', where Maurice Inc. will use its network, its business links across Africa and its knowledge of the market to not only conduct investments with Chinese companies and but also take advantage of competitive costs in Africa by producing there. The added value, like the marketing, will always come from Mauritius. We are a small economy, an island with no border trade.

3. Africa is anything but homogeneous. What strategy should be adopted to penetrate this continent?

Africa represents a huge opportunity but equally significant challenges for Mauritian investors. It must be analyzed in several segments: North Africa resource-rich countries countries with a regime that does not necessarily honor good governance countries emerging from conflict or in conflict and landlocked countries. Once a country has been identified in terms of its competitive advantages, the investor must carefully study the industry in which he wishes to invest. Then, he must identify a strategic partner.
Finally, the capital structure must be balanced to ensure that financial risks, business risks and political risks are balanced. The return on investment must be considered so that it is proportional to the risks incurred.

Very often, we seek to transpose a Mauritian success story to Africa. This is a serious mistake. The reasons for business success in Mauritius cannot be exactly replicated in Africa. It is necessary to rethink the economic model and take into account investments that can be adapted to the local context.

4. You are a great defender of Africa and have helped many Mauritian companies who wanted to invest in Africa and vice versa. Can we say that investors in Africa are only plundering its mineral resources, as in colonial times?

It's a cliche. The colonizing countries (England, France, Belgium, Portugal) are currently in a delicate situation and do not have the funds to invest because they are crumbling under enormous debts. China and India are very eager investors to take control of Africa's mineral resources. These resources must be transformed in order to have an added value for the creation of wealth. Having the resources without exploiting them is no better than not having them.

These countries do not always have the necessary expertise to transform these resources into wealth. As long as the authorities ensure that the investments are well distributed to all the stakeholders in the economy, I see no harm in that. It also gives governments the chance to diversify their economies, redistributing investment to other sectors. Africa has more to offer than just mineral resources.

5. We have been talking about the possibilities of using Mauritius as a springboard for investing in Africa for a long time. Concretely, what are the results so far?

The results are visible. They may not have been quantified, but the little knowledge of the market I have clearly shows me that many offshore companies have been set up to invest in Africa. The use of Mauritius as a platform to enter Africa is well known and highly optimized.

6. However, Mauritian investments in Africa, with the exception of Mozambique perhaps, remain quite timid...

This has not been aggressive for the simple reason that the local economy has offered considerable investment opportunities over the past decades. We must not forget the many successes in Tanzania, Madagascar (admittedly, in this country, given the political instability, there have been winners and losers) and the Seychelles too. There have also been attempts for the service sector in Africa, specifically on the East Coast it is still too early to state a verdict. The whole country suffers from a lack of regional strategy. And, without a clear logistics strategy, we cannot expect regional investment to be an instant success. We must follow the example of Singapore and Dubai in terms of logistics in order to become a real regional center.

7. But there are constraints to overcome in terms of maritime and air links. For example, many airlines have stopped serving Plaisance for financial reasons...

These are real challenges. We are far from our main markets. Logistics is a major consideration for us to be competitive. We are surrounded by sea and with no physical borders, goods can only be transported by air or sea. We therefore have a duty to be sure that our logistics resources are efficient, profitable and accessible. Singapore and Dubai are role models we should emulate. Both countries have effective sea and air access policies. In fact, Emirates has exported its services so much that it has quickly become the African airline par excellence. And, in its wake, Dubayy has evolved from a regional center into a center through which everything gravitates and which no one can afford to ignore. We need a regional strategic plan for logistics.

8. BDO is present in many African countries. What are your projects in the black continent in the short and medium term?

BDO in Mauritius is part of the DCDM organization, which is the first Mauritian firm to have exported its services to Africa. DCDM BDO offices operate in Madagascar, Comoros, Seychelles, Kenya, Tanzania, Uganda and with rights in the Democratic Republic of Congo, Rwanda and Burundi. Additionally, the BDO network in other African countries is led by South Africa, where BDO Mauritius has excellent connections.

Our goal is for BDO Mauritius and BDO South Africa to operate in an integrated and seamless manner and to be able to cross-sell with their clients.

South Africa is a developed country (despite the security problems) and cannot be ignored by an investor who wants to do business in Africa. With this platform we connect in the same way with BDO India so that Mauritius can ride the wave towards the last frontier.

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