Mauritius IFC: Strategic innovations for a future-proof and sustainable competitive edge

By Pazani Vaitilingon, Chief Commercial Officer, Africa, India and Middle East

The Mauritius International Financial Centre (IFC) has emerged as a pivotal gateway for investment into Africa. As the continent’s economic powerhouses continue to rise, with the African Development Bank projecting that Africa will account for 11 of the world’s 20 fastest-growing economies this year, Mauritius is strategically positioning itself to harness this growth, driving innovation and sophistication to the IFC through cutting-edge products including variable capital companies (VCC), virtual asset and initial token offering services (VAITOS), ESG and green bonds.

Mauritius IFC: a strategic hub for Africa

Africa’s economic potential is immense, and Mauritius, with its prime geographic location and robust legal framework, serves as an ideal platform for hosting cross-border investments into the continent. Mauritius’ membership in several regional trade blocs such as the African Continental Free Trade Area (ACFTA), the Common Market for Eastern and Southern Africa (COMESA) and the Southern African Development Community (SADC), further boost its attractiveness by facilitating cross-border trade and investment across Africa.

Traditionally, the Mauritius IFC has played a crucial role in providing structuring solutions for investors targeting Africa. As their demands evolve, it’s equally important for the Mauritius IFC to constantly reinvent itself, with forward-thinking solutions that meet current needs and anticipate future trends.  As a result, the Mauritius IFC, together with global investor service providers like IQ-EQ, have engaged in a transformation journey to develop innovative, trending and sophisticated products and services such as fintech, peer to peer lending, crowdfunding, and robotic and artificial intelligence enabled advisory services to respond to the ever-growing needs and expectations of clients, elevating Mauritius’ status as a leading IFC, capable of competing with the best IFCs in the world.

VCC: a game changer

The VCC Act 2022 was a major milestone for the Mauritius IFC, offering a flexible, cost-effective corporate structure that is highly attractive to fund promoters, investors and family offices. VCCs allow for multiple sub-funds within a single entity, each with segregated assets and liabilities, enabling diverse investment strategies under one roof. This flexibility, coupled with the ability to issue shares of varying amounts and distribute dividends out of capital, positions Mauritius at par with leading financial hubs like Singapore.

VAITOS: driving virtual transformation

The VAITOS Act, which came into force in 2022, sets out a comprehensive legislative framework to regulate the business activities of virtual asset service providers and initial token offerings.  It has been developed in accordance with international standards established by the FATF to manage, mitigate and prevent anti-money laundering and countering the financing of terrorism (AML/CFT) risks associated with these emerging and innovative business activities. Mauritius IFC, as a growing fintech hub, is amongst the first countries in the Eastern and Southern African region to adopt a comprehensive legislation on virtual assets and initial token offerings.

ESG and green bond listing: taking the sustainable leap

As global investors increasingly prioritise sustainability and impact investing, ESG and impact investing services are becoming indispensable. These services include ESG reporting, compliance and advisory, and help clients integrate sustainability principles into their investments. With Mauritius developing its own ESG framework, IQ-EQ is well-positioned to support sustainable finance, particularly in Africa. Moreover, on its path towards sustainability, the Mauritius IFC listed its first green bond in 2023, demonstrating its commitment to sustainable financing and driving positive change within the financial industry, with green investments and responsible financial practices.

Aligning the IFC with Mauritius’ strategic vision

In the Mauritius Budget 2024-2025, the Government continues to be committed to innovation underlining that “the development and spread of artificial intelligence across the world offers vast opportunities for Mauritius”, with tax changes to stimulate growth.  For example, a company holding a robotic and AI enabled advisory services licence will be allowed to claim the 80% partial exemption.  In addition, to boost the island’s credentials in innovation, a blueprint for the development of Mauritius as a fintech hub in the region will be devised with the assistance of the United Nations Economic Commission for Africa. These are all welcomed measures to further enhance the competitiveness of the Mauritius IFC.

Conclusion

Investors and fund managers are increasingly looking for flexibility, efficiency and technological sophistication needed in today’s complex financial environment. As the Mauritius IFC continues to evolve, driven by strategic initiatives, legislative and regulatory advancements, it should also be at the forefront in terms of innovative financial products and services to further enhance the jurisdiction’s offering, placing it at par with its global counterparts and meeting the needs of investors and managers alike.

As a pioneer in the Mauritius global business landscape, IQ-EQ is leading the way in our commitment to excellence and innovation, propelling the Mauritius IFC to higher shores within the African landscape. Find out more about IQ-EQ Mauritius.

This article was originally published in Africa Global Funds’ September 2024 magazine. 

About the author

Pazani is IQ-EQ’s Chief Commercial Officer for Africa, India, and the Middle East (AIME). A seasoned professional, Pazani has nearly 20 years’ experience in the private equity and finance sectors, specialising in fund administration, accounting, tax, compliance and business development. He’s a Fellow of the Association of Chartered Certified Accountants and a member of the Mauritius Institute of Professional Accountants and the Mauritius Institute of Directors.