Mauritius has been hit with a double shock: COVID and FATF LIST. However, in light of this adversity the Financial Services sector continues to grow. What has been the main drivers of this resilience?
First, the entrepreneurial spirit and desire of Mauritian professionals to go the extra mile to meet the client expectations. This is very much in our DNA, and taking pride in what we do, and this has over the years translated in a competitive advantage for the nation.
Second, the eco-system of Global Business: Management Companies, lawyers, accountants, auditors and bankers have largely contributed to our jurisdiction operating in a world class manner, a recognition which materializes with the volume of repeat business.
Third, the regulatory framework has also been strengthened to ensure the jurisdiction does have the edge. Featuring on the FATF and EU lists were unfortunate accidents and are supposed to be very short-term mishaps. The Government of Mauritius has turned this adversity into a great opportunity by ramping up legislations and addressing perceived process and procedures weaknesses head on. The efforts and drive for improvement at all levels have ensured that our policy makers have left no stone unturned in addressing the concerns raised by those who branded us a bad pupil. We are within touching distance of turning the situation around and more importantly, this new level of compliance that we are reaching now will be sustainable. We shall be playing in a different league and will certainly maintain being a jurisdiction of repute and substance which is the result of decades of hardwork.
However, no IFC is safe from a problem or a scandal. The key issue is how we react to future issues, how our institutions respond and how we enforce the myriad of legislations. The challenge for us remains in enforcement and sanction.
Although the economy has suffered a battering from COVID with 25% of the economy grinding to a halt with the hospitality stocks dwindling, the capital market overall has been responding well. There are two main reasons: Local stocks are not very liquid so few stocks changing hands can drive the price and some of the large market cap enterprises are well diversified in terms of business segments and geography which have helped maintaining their performance in positive territory. There is still good value on the market, as there are still stocks trading at a huge discount to fair value.
Over the past two decades, we have witnessed how the Mauritius International Financial Centre has gained global repute. Mauritius has met expectations by ensuring good corporate governance, innovative products and services. Furthermore, in terms of ease and cost of doing business, Mauritius is faring well and remains a competitive jurisdiction.
We also note that before, Mauritius has been largely perceived as a ‘treaty shopping’ and back-office jurisdiction but since few years now all of this is rapidly changing. The IFC is forging ahead with a strategy to demonstrate economic substance over and above existing legal substance. However, we can fast track our growth and establish ourselves as a tech island but somehow, we have been slow in getting off the mark. The future in financial services will be in fintech and we need to embrace this change early before it gets imposed on us.
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