BOM governor shares views on Sino-African economic relationship
auritius’ location between Asia and Africa places the island in a busy causeway of cross-border trade and activity that demands an increasingly sophisticated array of financial services.
In response, the island’s banking sector is now compounding its core strengths through financial innovation, staking a claim to its role as the transcontinental conduit for investment management.
Numerous factors have merited Mauritius’ rise in the world of global finance, including a squeaky-clean business reputation that distinguishes the Indian Ocean island as a upholder of law on the African continent, a fact that has led business leaders to compare it to other major finance hubs.
“I think Mauritius has the credibility and standing to become a regional financial hub for Africa,” said Alain Law Min, CEO of Mauritius Commercial Bank, the country’s oldest and largest domestic banking institution.
“It is an attractive and compliant jurisdiction with political stability, a bilingual workforce, strong capabilities and competencies in legal, accountancy, capital market and wealth management services,” Law Min said.
He said Mauritius also leads the continent in applying new technology, having been recognized by the Global Innovation Index as the most innovative nation in Africa.
At MCB, this continent-leading aptitude is readily observable.
“Three years ago we introduced MCB Juice, our mobile payments platform, and today we have 90,000 customers that have downloaded the mobile app,” Law Min said.
“Imagine, our internet banking customer base is 120,000 and that took us 20 years to reach, but in only three years we built our mobile customer base and it’s not far short of that size. That’s very significant growth,” he added.
He noted that, financial technology, also called fintech, is finding a place as a tool not only to improve customer service, but also to mitigate financial risks. The fintech-based service is sure to get a welcome reception from prospective investors entering Africa for the first time.
“While most innovations in banking revolve around customer outreach, State Bank Mauritius also uses technology for effective management of risks and compliance,” said Kee Chong Li Kwong Wing, chairman of State Bank Mauritius.
Such protective measures taken by Mauritian banks using fintech will only add to their capacity for managing cross-border transactions, according to Li Kwong Wing.
He said this historic moment for the island has been further propelled by banks such as SBM, which are preparing to bolster their continental network in turn.
“SBM is positioning itself as a gateway for global investors looking at emerging opportunities in Africa,” said Li Kwong Wing.
“We are par tnering with the African Export-Import Bank to tap new opportunities, and we recently acquired Fidelity Bank in Kenya,” he said, adding “This will help us offer safe, secure and comprehensive services for Chinese businesses going into Africa”.
Mauritius’ banking sector is well capitalized, resilient and highly competitive, having attracted top global operators that add value to the already innovative financial landscape. The size of the offshore market, however, presents a challenge that must be monitored closely. governor of the Bank of Mauritius (BOM), explains the sector’s successes and challenges.
The banking sector in Mauritius displayed remarkable resilience during the 2007-08 global financial crisis, barely requiring any liquidity support from the authorities.
To d a y, b a n k s m a i n t a i n , o n average, a capital adequacy ratio of around 17 percent and enjoy a comfortable liquidity position, reflecting their capacity to withstand adverse shocks. In turn, the financial sector continues to thrive, with relentless market and product diversification efforts pursued by innovative operators.
Few countries in Africa combine a favorable business climate, stable democracy, macroeconomic stability, a fully liberalized financial sector, reliable banking system, low taxes and an educated bilingual workforce as strongly as Mauritius does.
Furthermore, these qualities support the banking sector, which is well regulated in conformity with international best practices and suitable macroeconomic policies sustaining economic growth, with Mauritius currently enjoying low inflation and external debt.
Today, Mauritius has several international banks in operation serving the financial sector, with some of them actively considering setting up their Africa treasury center here.
The jurisdiction has signed 14 bilateral accords with African nations for double tax avoidance purposes, and institutions worldwide have come to look up to Mauritius as a secure platform to channel their investments into Africa.
Mauritius is an active member in several regional economic blocks — such as the Common Market for Eastern and Southern Africa (COMESA), the Southern African Development Community (SADC) and the Indian Ocean Rim Association (IORA). These regional treaties provide the necessary legal foundation to develop strong business relationships across the continent.
State Bank Mauritius uses technology for effective management of risks and compliance.” Kee Chong Li Kwong Wing, chairman of the State Bank Mauritius I think Mauritius has the credibility and standing to become a regional financial hub for Africa.” Alain Law Min, CEO of Mauritius Commercial Bank Today, banks maintain, on average, a capital adequacy ratio of around 17 percent and enjoy a comfortable liquidity position.” Rameswurlall Basant Roi, governor of Bank of Mauritius
With a share of 12 percent of the country’s GDP, the financial sector is increasingly exposed to risks. Two overriding challenges are how best to address the risks and vulnerabilities associated with the offshore business sector and how best to maintain the competitive advantage of the financial sector as a whole. This requires high-caliber human capital to keep the banking sector above troubled waters in such challenging times.
The BOM is upgrading its supervisory process with the implementation of a robust risk-based supervision framework and is moving forward with consolidated supervision and oversight of financial conglomerates. A crisis management and resolution framework is cur-
Q+A: DANIEL NG TSEUNG
rently being worked out. These initiatives will reinforce the regulatory regime and foster financial stability.
The Bank of China opened its first subsidiar y in Mauritius in September 2016. This will speed up the process of shaping Mauritius as a major international financial center on the Afro-Asian trade and finance route.
Indeed, the presence of the Bank of China, whose core business revolves around international banking services between Asia and Africa, adds diversification. Moreover, Mauritius will implement a renminbi clearing system to enhance the ease of doing business between China and Africa in particular and the Bank of China will promote the use of renminbi for cross-border payments.