MAURITIUS AS A GATEWAY FOR AFRICA Gary Gowrea

1. MAURITIUS AS A GATEWAY FOR AFRICAGary Gowrea

2. What people have to say about Africa? Tony Blair once described Africa as : “There is no doubt: Africa is changing for the better, the perceptions of Africa are Changing for the better. There is a new sense of hope and confidence, an optimism and An expectation that is based on evidence not dreams…”

3. Changing Africa - Growing domestic demand in Africa and Rise of middle class acted as a shock absorber - Improved macroeconomic management from a generation of managers who trained during the restructuring programmes of the 90s. - Diversified Economies

4. Why Africa? Deepening of Financial Markets: Expanding banking sector 52 African cities with more than 1 Billion people - emerging middle class & 1.2 billion people of working age by 2020 Ease of doing business has improved - Better business regulations Diversified economy -commodity, financials, communication & technology, consumer goods and retail IMF: Africa will hosts seven of the fastest growing economies in 5 years Improved macro economic indicators and untapped resources Private consumption to reach USD 1.8 trillion in 2020 Spending power of Africa to increase by 25% in the next decade Need for infrastructure

5. GDP Growth rate and FDI in Africa GDP Growth Rates (%) for Sub Saharan African Economies according to The Economist, 2012: Expected Capital forecast to reach USD 150 Billion by 2015 Overall Africa is 3rd, ahead of Russia and Brazil in terms of the number of FDI Projects

6. Investments in Africa in recent years - Takeover of Zain Telecom’s Africa Operation by Indian Telecom major Airtel for USD 10.7 billion (making Airtel have presence in 15 African Countries). - Coca-cola looking to add 1300 to 2000 new distribution businesses creating between 5300 to 8400 new jobs and generating about USD 520 million in new revenue for local economies. - Godrej acquiring Nigerian personal care product maker Tura last year for about USD 33 million and is planning to acquire 51% stake. - Walmart’s deal to buy South African retail chain Massmart for USD 4 billion. - Chinese investments in Africa are expected to cross USD 50 billion and Sino-African trade is expected to reach USD 300 million within 2015.

7. What people have to say about Mauritius? Hillary Clinton, US State Secretary, 11 August 2009: “Mauritius may be a small country, but it has the potential to make a big impact, both by contributing to Africa’s overall prosperity and by showing the way, providing an example of how other nations can stimulate growth by setting clear and fair rules for the benefit of those who wish to do business in Mauritius.”

8. Mauritius – Africa: Rationale • Ranked 1st in Africa the World Bank Ease of Doing Business Survey 2012 (23rd in the World) and ranked first in the Mo Ibrahim Survey on corporate governance • Member of regional blocs, such as SADC, COMESA and IOR-ARC • White List of OECD • Modern legislative framework with ultimate court of appeal is by judicial review by the Law Lords of the Privy Council of the UK • No foreign exchange restrictions – allowing free repatriation of funds • Ratified 36 DTAAs (13 DTAAs with African countries) – DTAA with Republic of Congo and Kenya awaiting ratification and DTAAs with Zambia, Nigeria, Egypt and Malawi awaiting signature, with Algeria, Burkina Faso, Yemen, Ghana and Saudi Arabia under discussion • Ratified IPPAs with several of the Africa treaty partners • Member of MIGA, a World Bank Agency • Mauritius is also positioning itself as the arbitration centre in Africa • The Stock Exchange of Mauritius has been designated as a Recognized Stock Exchange by the UK

9. Mauritius: Income Tax Provisions • Income Tax Rate for corporations - of 15% • Credit for foreign taxes suffered available; credit can be claimed in the form of WHT, underlying taxes or tax sparing • Qualified Corporations – where evidence of foreign taxes suffered are not available, they are eligible to an 80% deemed tax credit; resulting in a maximum effective rate of 3%. A qualified corporation is defined as a corporation holding a GBL 1 License under the Financial Services Act 2007 • No WHT on outbound payments by Global Business Companies • No Capital Gains Tax on disposal of shares in Mauritius • No Thin Capitalization rules/legislation • No Transfer Pricing rules/legislation

10. Mauritius: Commonly used vehicles

11. Regional Headquarter Foreign Company -Foreign tax Credit -Underlying Tax -Mixholding Tax (Mixer Company) RHQ Mauritius Africa Africa Africa

12. Treasury function Foreign Company • Advantage: • Arm length • -Profit extraction Pledge Assets Mauritius Bank Loan Africa

13. Procurement Centre Suppliers Advantages: Can make use of freeport/ reduced port handling charges Free Port Company Mauritius Africa

14. PAY N GO African Company Client Places Order- transfers money to Mauritius to make payment Mauritius Makes payment on behalf of client Supplier-Africa Tax in Mauritius: Taxation at 15% Foreign tax credit – 80%

15. Captive Insurance • Tax in Mauritius: • 3% if holder of a GBL 1 Licence Ownership Group Coverage Operating Business Captive Reinsurance Insurance Premiums

16. THANK YOU

17. Mauritius: DTAA Network Belgium Croatia Cyprus France Germany Sweden Italy UK Luxembourg Bangladesh China India Malaysia Nepal Pakistan Sri-Lanka Singapore Thailand Kuwait UAE Qatar Oman Barbados Botswana Lesotho Mozambique Madagascar Namibia Rwanda Seychelles South Africa Senegal Swaziland Tunisia Uganda Zimbabwe

18. Mauritius – Africa: DTAAs