BOM governor shares views on Sino-African economic relationship
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. Rameswurlall Basant Roi, governor of the Bank of Mauritius (BOM), explains the sector’s successes and challenges.
How would you describe the Mauritian banking sector?
The banking sector in Mauritius displayed remarkable resilience during the 2007-08 global financial crisis, barely requiring any liquidity support from the authorities.
Today, banks maintain, on 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.
What qualities make Mauritius a truly competitive international financial center?
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. Why are banks utilizing Mauritius as a bridge to Africa?
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.
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
What are the core challenges the financial sector faces today?
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.
How do the BOM’s regulation and supervision guidelines work to meet these challenges?
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 currently being worked out. These initiatives will reinforce the regulatory regime and foster financial stability.
How will Bank of China Mauritius consolidate Mauritius’ position as a gateway to Africa?
The Bank of China opened its first subsidiary 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.