Africa: Building a two-way street
On a Friday afternoon a civil servant hurriedly talks into his phone, making the finishing touches to a framework agreement on a new ‘technology park’. It is a legal document that will channel Mauritian investment into a special economic zone (SEZ) outside of the Ghanaian capital, Accra. The following week, the agreement will be approved by the Ghanaian parliament, hence the pressure to finish.
Yash Manick, the chief executive of the Mauritius Africa Fund, says he should have moved offices to Ebene, the new business headquarters of the island, but for the moment is still in downtown Port-Louis. “I don’t mind!”, says Manick. “It gives me access to the unlimited powers of the government when I need to get things like this done in a hurry.”
The Mauritius Africa Fund will be familiar to students of recent Asian economic development: a quasi-governmental agency, run as a public company to streamline decision-making, but whose goal is economic-nationalist in scope. While initially it was set up to take small equity positions in Mauritian companies that are investing in Africa, that quickly became tough to manage. The new direction is to first get government-to-government support and then build SEZs into which Mauritian and other companies can settle.
For now, there are zones planned in Senegal, Ghana, Côte d’Ivoire and Madagascar. Senegal’s first phase, in the new city of Diamniadio, is complete, with 13ha to be rented out. “The demand we have been getting far outstrips supply,” assures Manick. “This is something that we have done before. We know how to industrialise and create special zones.”
The logic to push Mauritian companies into Africa seems clear. When faced by a declining population and a domestic market unable to keep pace with the ambitions and capital stock of its largest conglomerates, you need to seek a hinterland. When you add a global push to regulate offshore finance hubs, you create the current climate in Mauritius: a search for a toehold in Africa across the board.
In the world of finance, this push to greater sophistication is already happening, says Rama Sithanen, a former minister of finance who is now chairman of IFS, a trust and fund administrator recently bought by the Jersey-based Sanne Group. “It’s a work in progress, to be fair,” he says, “it’s significantly better than when we started 25 years ago.”
That sets up Mauritius, Sithanen argues, to act as a hub for investors who want to take advantage of the continent’s growth opportunities but who are wary of getting money stuck in unstable countries. “Investing directly in places like India and Africa is no fun. People realise that,” says Sithanen, who also acts as chairman of the Rwanda Development Board. “You need to identify and price the risk”.
For Sanjiv Bhasin, the CEO of AfrAsia bank, “the ability to set up special purpose vehicules in Mauritius helps in managing that risk”.
Banks like the State Bank of Mauritius say they like the fact that the Mauritian government is giving them back-up at the national level – again, a kind of economic diplomacy that successful Asian developing economies are good at.
Relations with African countries work in other ways too, and South Africa is an obvious target for some projects. Mont Choisy is a property company offering a new development around Grand Baie in the north of the country – a Mauritian residency permit is included in the price of the apartment, which is attractive to some South Africans. “They make up about 40% of the new development,” says Jyoti Jeetun, the chief executive of Mont Choisy.
But while Africa is the watchword for the government, some say the island needs to think seriously about immigration, from Africa and elsewhere. Arnaud Lagesse of the island’s largest conglomerate, IBL, says: “Look at the demographics. We need to start thinking about selective immigration, at the very least.”
Opening up the residency laws would be one option, argues Jeetun, who is also an ardent promoter of the need to think about immigration differently. “Right now it is a taboo subject,” she says, “but Mauritius is too small. We want to be Singapore and Dubai. But we don’t want to open the doors like they have.”
This article came from the November 2017 print edition of The Africa Report magazine