“With the higher rates [on investments] returns one would invest in off-shore rather than concentrate on only domestic markets. We are currently seeing a lot of cross border investments going into Africa these days,” Yogesh Gokool Head of International Banking, Trusts and Custody at AfriAsia Bank told CNBC Africa.
However international and African private sector companies are sometimes reluctant to conduct off-shore finance due to insecurities of possible risk of corporate expropriation.
“There are risks associated with off-shore investments in order to mitigate those risks investments you would need to find the best place for the investment. Mauritius is one of the best places for structuring African investments,” he said.
To protect foreign investors the government implemented the Investment Promotion and Protection Agreements (IPPA). IPPA are consensual agreements between countries which promote and protect the interests of the foreign investor within a local country.
According to World Bank ranking for Ease of Doing Business 2014 report Mauritius is ranked 20th out of 189 economies. The highlights being ranked 12th position for the; Protecting Investors and for the Trading Across Borders categories.
“Mauritius is a treaty based jurisdiction to mitigate tax positions with 40 double-taxation agreements with foreign countries and about 20 agreements with African countries,” said Gokool.
The ranking of 45th place according to the World Bank’s Global Competitiveness Report 2013-14 makes the country the best destination for trade in Africa.
The banking industry consists of 21 banks, of which 14 are foreign companies, 6 local banks and 1 is a corporation of both local and foreign ownership. All the banks are authorised to perform both local and international banking transactions.
(READ MORE:Mauritius poised as next emerging market giant)
“Cross border investments are encouraged now with organizations such as the SADEC or COMESA which encourage cross border trades among countries and allows preferential tariff rates to be applied in these regions,” said Gokool
The banking structures in Mauritius allow the African member states of SADEC and COMESA to receive bridge finance to reach capital goals for investments transaction with international investors.
BY: THANDO MATUTU