Dr Suresh Nanda, Head of International Banking at Bank One, shares his views on the way forward for the forthcoming Blueprint for the financial services sector, and suggests that Mauritius should take the lead in focusing on collaboration between Banking, FinTech and Telcos to become a strong global hub for new generation banking, as global boundaries disappear.
What should be the main areas of focus of the Blueprint for the financial services sector for the next 10 years?
The financial services industry is currently undergoing phenomenal change across the world and will be having a completely different complexion in the coming years. The Banking sector, more specifically, will continue to face increasing challenges from disruptive innovation brought about by smart and nimble Fintech operators whilst grappling with convergence of other sectors such as telecom, which have ready access to a large number of customers. In this changing landscape, Mauritius should take the lead in focusing on the collaboration between Banking, Fintech and Telcos in order to become a strong global hub for new generation banking, where the global boundaries slowly disappear. This entails a new framework for the financial services sector and a fresh look at regulatory considerations in light of the changing business environment.
The role of the Mauritius IFC also needs to be redefined and a new positioning and strategy adopted for the jurisdiction taking into account our core strengths and track record.
For instance, Mauritius has to work towards reducing the gap with Singapore rapidly if we are to remain relevant as a major channel of foreign direct investment (FDI) into India. Indeed, Singapore remains the preferred hub for India investments particularly from the larger funds. It is mainly so because substance can be created better in Singapore with the availability of a high pool of trained corporate finance professionals and the inclination of fund managers to choose Singapore both from the point of view of residence as well as connectivity to other global financial hubs.
Furthermore, with the coming in force of the new DTAA with India earlier this year, Mauritius currently has the best tax advantage on debt raising for Indian corporates. With the current market scenario in India whereby the debt capital market is fast expanding with renewed emphasis on infrastructure and project financing, there is a huge opportunity for Mauritius to emerge as the preferred destination for Indian debt financing.
Whilst India remains an important focus for the Mauritius IFC, there is a real need for us to broaden our horizons by positioning ourselves on other markets where we can add value for investors. In recent years, substantial efforts have been made to position the Mauritius IFC as a reliable and competitive hub where investments into Africa are structured and managed effectively. Given our geographical proximity and track record as an international financial centre of repute and substance, the Mauritius IFC is well placed to benefit from the growing attraction for Africa as an investment destination.
Africa’s own markets are also maturing and creating new opportunities for Mauritius. Indeed, African corporates are maturing and a number of families are setting up family offices and structures to manage and protect their wealth. In addition, a number of such corporates are getting listed thus realising more wealth for their owners and opening huge opportunities for wealth management in Africa. Mauritius has to evolve as a competing location to other Private Banking hubs including Switzerland and Dubai, which are all catering to African market at present.
What are the main challenges to be addressed?
One of the main challenges of Mauritius is to change the nomenclature of the financial services industry. Currently, the banks are focused on lending surplus USD, EURO and GBP resources primarily in Africa and other locations due to availability of relatively cheap funding. The challenge for them is to move to the next level in building complex debt structuring expertise.
Currently, there is a dearth of talent for debt capital market expertise and these have to be developed by attracting external talent from around the world and the upskilling of local talent to make it attractive for global investment banks to set up their offices in Mauritius.
How should the government and private sector work together to reach appropriate solutions?
The training and upskilling of financial services sector professionals should be a key priority for the government and the private sector in order for Mauritius to compete with other major financial centres including London, Singapore and UAE. Together they need to layout a roadmap for Mauritius to attract high calibre banking and finance professionals who will resolve the skills gap in the short term and allow for capacity building by grooming local talent in the mid to long term.
Repositioning of the Mauritius IFC as a high-value added international financial centre should also involve a concerted effort from the government and private sector as it is not merely a communication exercise but underlies a strategic intent for the whole jurisdiction.
Source: Platform Africa