The opening of the Suez Canal in 1869 diminished the strategic importance of Mauritius as a way station for international shipping, bringing an end to its great trade legacy. But things are looking up for the island nation, which today looks set to become a centre for international finance and renminbi settlement.


100 years back, Mauritius was a Singapore,” says Bingumal Thewarathanthri, head of transaction banking at Standard Chartered Bank in Mauritius.

“We had 100-plus ships in the harbour,” he tells GTR, “but with the Suez Canal, all the trading ships changed their course and Mauritius was no longer a key stopover within a lucrative trade route. This naturally meant the departure of many leading trade nations of that time.”

Today this banker stands together with other Mauritians who believe that the island has the ability to recapture its former glory and become an indomitable trade hub once again.

“Mauritius is re-emerging as a key trade and investment hub for the region with the formation of the south-south trade corridor, in particular the China-Africa corridor, estimated to be worth over US$200bn,” he explains.

Mauritius has set its sights on becoming an International Finance Centre (IFC) and, being strategically located within the Asia-Africa trade corridor, is “well-positioned to serve corporates as a platform that efficiently facilitates trade within the region”, says Thewarathanthri.

With China-Africa trade increasing 10-fold in the last decade, most banks are tracking the trend that sees trade flows from Asia into Africa being routed through Mauritius.

“Mauritius is proving itself to be a reliable location for financing the Asia-Africa trade, while physical trade flows through the country continue to show potential,” says Aslam Taher, head of corporate banking at SBM Mauritius Ltd.

In late October 2014, at a meeting convened by the Central Bank of Mauritius’ monetary policy committee, Nishan Degnarain, a member of the committee presented a summary of a longer policy paper on the implications and potential of Mauritius as the first renminbi (Rmb) hub in Africa.

“There will be a growing need for Rmb-denominated transactions in Africa,” reads the presentation.

It lists three prerequisites necessary for countries to become trading hubs for the Rmb: a bilateral currency swap agreement; a sophisticated financial system (noting that Mauritius’ financial centre is well-positioned, with good international standing, two exchanges: SEM and Bourse Africa, internationally-recognised regulators, and a good credit rating) and a local Chinese clearing agent (noting that two Chinese banks have already approached Mauritius in this regard, and an additional three Chinese banks are actively exploring their Africa footprint and are using Mauritius as a regional headquarter to this end).


GTR speaks with Raoul Gufflet, head of international at Mauritius Commercial Bank (MCB) and Harvesh Seegolam, director of Mauritius’ Board of Investment, about the country’s plans for the future.

GTR: What will the status of being an Rmb trading hub mean for Mauritius?

Seegolam: Mauritius has over the years evolved to become a respected, trusted, well diversified and innovative financial centre of substance which adheres to best international norms and practices. As the flow of investment and trade rise between China and Africa, the development of an Rmb trading centre in Mauritius will allow us to further strengthen our offerings as a preferred financial centre and address a gap in the market. We already have many of the most active Chinese entities in Africa, running successful operations and regional headquarters in Mauritius. The Rmb centre will provide further comfort and options to these companies, while complementing the existing financial services ecosystem.

Gufflet: Obtaining the status of an Rmb trading hub will allow Mauritius to further consolidate its position as a major regional offshore financial hub and to better harness the growing financial streams flowing through the China-Africa corridor, the more so considering that whilst Asia, Europe and the Americas already have Rmb trading hubs, Africa has none hitherto. From a holistic perspective, SMEs as well as large corporates with trade relationships with China would be incentivised to approach Mauritian-based banks for solutions to locally manage their global Rmb position efficiently, settle payments in a timely manner or hedge their exposures. Additionally, from a financial perspective, the backstop facility will act as guarantee against the drying up of the liquidity on the market in case of crisis and enable the direct conversion of currencies to Rmb. In the medium to long-term, as the available Rmb-denominated asset classes expand, we may well see further take-up of credit facilities and derivatives in Rmb, as corporate treasurers diversify their types of funding to take advantage of the relative monetary stability of the ‘redback’.

The status of an Rmb trading hub would represent a significant enhancement of the financial architecture of Mauritius and a compelling complement to the existing jurisdictional value proposition, more particularly for Emea companies engaged in trade with China. We could potentially see amplified business activity in the global business segment, as foreign corporates set up shop in Mauritius or further leverage on their existing presence to tap into (i) a comprehensive pool of Rmb-denominated solutions, (ii) the efficient business framework, underpinned by factors ranging from Mauritius’ ease of doing business to its preferential access to African and Asian markets, and (iii) liberal currency and capital controls. Whilst operating within an Rmb hub, Mauritian banks would offer Emea traders the possibility of avoiding an additional layer of foreign exchange cost and currency risk and to have transactions settled within a favourable time zone (GMT +4). As a result, this would likely open up, in the medium term, a new frontier for financial innovation and enlarge the competitive landscape in Mauritius, notably through the potential entrance of Chinese banks in the market.

Against this backdrop, it might be judicious for the country to seek the official hub status which might necessitate, as in most other jurisdictions: (i) a currency swap agreement between the two countries’ central banks, giving the BoM the possibility to act as a Rmb lender of last resort for local banks and (ii) the appointment of a local clearing bank by the People’s Bank of China.


GTR: What steps can be taken to accelerate the process?

Gufflet: On the Mauritian front, the BoM as well as other public bodies have already initiated a thinking process on the merits and implications of establishing Mauritius as a Rmb clearing hub. For instance, as part of its initiatives to enlarge Mauritius’ economic space and reinforce ties with the Asian business communities, the national investment promotion agency, the Board of Investment is actively garnering the business interests of Chinese businesses to use Mauritius as a trade and investment platform for accessing Africa. It follows that Mauritius holds a noteworthy appeal for Chinese financial institutions, especially those operating in trade finance and investment spheres, and also other Chinese firms interested in setting up their regional headquarters and treasury management activities in Mauritius. Of note, several prospective Chinese banks, most of which are actively seeking to broaden their African footprint, have already approached the Bank of Mauritius to set up operations in Mauritius or using Mauritius as their regional headquarters.


GTR: Does Mauritius have the potential to become like Singapore as a financial and treasury centre?

Seegolam: Over the last couple of years, we have put necessary the focus to encourage MNCs and other companies active in Africa to conduct their regional treasury services from Mauritius. The proposition has seen significant success and today we have a lot of regional treasury services being provided from Mauritius by leading banks as well as African companies. This in itself testifies that as a trusted financial centre, we have all the necessary pre-requisites as a treasury centre – a well-regulated and competitive financial centre with no exchange control, availability of highly professional treasury managers, a welcoming and exquisite lifestyle open to expats, a developed stock exchange, political stability, as well as rule of law, certainty and security.

Gufflet: Notwithstanding the similarities which Mauritius and Singapore share as financial hubs, the operating context of their respective financial centres has, over time, given rise to a very distinctive, and somewhat complementary, set of competitive advantages. This is due to specific idiosyncratic political, regional, social and economic dynamics which have shaped differently the developmental priorities of the two respective countries. Nonetheless, Singapore remains, in many respects, a beacon of success from which much of the structural reforms brought to the financial sector framework in Mauritius are inspired.

Mauritius is envisioning to become a full-fledged International Financial Centre (IFC) bridging Africa and Asia, which is not too dissimilar from Singapore strategic positioning vis-à-vis Asian markets and the rest of the world. The fulfilment of this vision would imply a deepening and broadening of the financial architecture of Mauritius in a manner which is relevant to the distinctive needs of the business community in the targeted regions, particularly Africa. In this spirit, during the last decade, the structural transformation agenda for Mauritius’ financial services industry has devoted a great focus on (i) developing a number of mutually-beneficial commercial ties with key African markets and (ii) laying the necessary foundations for the introduction or enhancement of high value-added activities in the financial sector. These encompass specialist financial services in the realm of investment banking, merger and acquisitions, regional headquartering, and private equity.

For instance, in 2013 the government came up with a legal framework for the establishment of Regional Treasury Centres by global business companies in Mauritius. In a nutshell, this scheme makes a smart use of Mauritius’ liberal regime on capital repatriation and foreign exchange by allowing the treasury function of foreign companies to manage their global or regional treasury position in Mauritius. Interestingly, the scheme can be of relevance for diverse types of stakeholders ranging from African corporations seeking Pan-African expansion to Asian companies seeking an African footprint. This new measure comes amidst a continuous stream of updates which are being brought to the financial framework in Mauritius.

As a result of the enhanced focus of Mauritius IFC on Africa, in 2013, around 60% of intended investments channelled through Mauritius by global business companies had been earmarked for Africa. Globally, Mauritius is being increasingly recognised as a springboard for African investments. Nevertheless, in order to further capitalise on this momentum, and further entrench its positioning as the foremost African financial hub, policy makers as well as the industry operators are conscious of the need to proactively enhance the jurisdictional value proposition so that it answers comprehensively to the fast-evolving financial needs of business partners in the region.