With the right policies, investments, and collaborations, African International Finance Centres (IFCs) have the potential to shift the African economic narrative, positioning the continent alongside the economic giants of the world.
The benefits of IFCs are manyfold, providing international access to financial services, and efficient regulatory regimes that enable trade, lower overall costs, and help reduce investment risk. As the Cato Institute has stated in its analysis on IFCs, their power extends beyond the local benefits, namely that they “add competitive pressures to the global ‘law market’, and so encourage better laws in onshore economies as well”. These cross-nation regulatory environments, such as the African Continental Free Trade Agreement (AfCFTA), are designed to facilitate the diversification of exports and accelerate trade growth opportunities across the continent.
Because of such agreements, international interest in African IFCs has grown over the years, but it is up to those of us in Africa to take the lead in building our attractiveness to investors, with a focus on both intra-African and international investment.
Earlier this year, the World Alliance of International Finance Centres (WAIFC) announced the establishment of the Africa Roundtable, a joint collaboration of four African IFCs (Nigeria, Morocco, Rwanda, and Mauritius) to improve competitiveness of IFCs across the continent, conduct research, share best-practice, and most importantly, to advocate for regulatory coordination among member countries to promote intra-African investment.
But that is not to say several African IFCs haven’t already started making their mark globally.
Mauritius was recently recognised as one of the top African Investment destinations in the Global Financial Centres Index Report, surpassed only by Casablanca with both continuing to climb the global rankings. Released in September, the 2024 report examined 133 financial centres across the world, examining financial confidence and overall competitiveness of International Finance Centres (IFCs). While the average ratings across all centres were down 0.42%, Mauritius was able to rise four positions to rank 60, placing it as the second most competitive finance centre in Africa, and the fifth highest in the Middle East and Africa region.
This has been the culmination of decades of strategic planning by the island nation’s government, to recreate Mauritius as the gateway for investment into Africa.
The Long-Term Plan for Mauritius as an IFC
In recent years, Mauritius has announced its numerous economic and social ambitions, from becoming one the continent’s most attractive retirement hubs, a medical hotspot for the Indian Ocean, and of course, a leading IFC.
However, while the efforts thus far are being recognised, the work is far from over. According to the Economic Development Board of Mauritius, the core focus in the coming years will be promoting financial services innovation and building on the country’s strong legal frameworks for investment.
This will be accomplished by prioritizing compliance with the applicable international standards such as in areas of anti-money laundering, the combatting the financing of terrorism, and working with the frameworks of the Organisation for Economic Co-operation and Development, Financial Action Task Force, and European Union.
However, central to this development will be similar international agreements – like the Africa Roundtable – to achieve the cross-border investment, collaboration, and innovation-sharing that can leverage Mauritius’ strategic geographic location to attract investors from across the continent and beyond.
Improving Investment Access in Mauritius
Lowering the overall cost of investments has already been achieved by the establishment of 46 Double Taxation Avoidance Agreements with key markets globally, making Mauritius a more competitive and strategic investment destination for those seeking efficient tax structuring, legal certainty, and a stable business environment for cross-border investments.
Similarly, Mauritius becoming a part of the AfCFTA means a removal of 90% of tariffs of goods traded within the agreement’s zone, encouraging foreign companies to set up factories and assembly plants on the island for greater freedom of African trade – allowing the export of goods to mainland Africa tariff-free.
But that’s not to say the country is only targeting larger organisations. In fact, a key aspect of the country’s investment strategy is to attract startups and innovators – especially in the fintech space.
Innovation hubs such as the Mauritius Research and Innovation Council and FinTech Innovation Lab offer incubation, mentorship, and funding for startups. These hubs are designed to accelerate the growth of businesses in the FinTech and digital services industries, providing access to investors and collaborative networks. However, there is still more that can be done, and we are already seeing other nations who are part of the WAIFC’s Africa Roundtable finding new ways to attract investment and to innovate.
Nigeria, for example, establishing a digital technology exchange programme hub in the United States, and international tax treaties continue to evolve in Morocco.
Through initiatives like the Roundtable, we can continue to learn from each other’s successes, and drive prosperity for our respective nations and beyond.