As an offshore financial hub situated in the Indian Ocean off the coast of Africa, Mauritius has long benefited from being in between countries, cultures and capital flows.

Mahen Kumar Seeruttun, Mauritius’s minister of financial services and good governance since 2019, says that the country is now positioning itself to facilitate capital flows into Africa.

“When we started off our international finance centre, lots of investment flows were going through Mauritius into the Indian market. Now we see more [flows] going into the African market,” he explains. “Our objective is to be a transparent jurisdiction of substance and repute.”

Over the past year, investors from Japan, China and India have been interested in investing in Africa through Mauritius, according to Mr Seeruttun. He mentions a delegation from Japan that is looking to domicile some of its funds on the island nation following the government’s announcement it will invest $30bn in Africa. 

Transparency drive

After the introduction of the Mauritius Offshore Business Activities Act in 1992, the Mauritius International Finance Centre (IFC) was established. Foreign businesses could set up entities in the country with limited public disclosure. Over time, the island nation gained a reputation for being an offshore haven and a conduit for direct investors to invest in other destinations while taking advantage of the regulations in force in Mauritius.

FDI from Mauritius into India via has been widely seen as an example of this phenomenon. Between 2000 and 2022, Mauritius was the biggest source of FDI equity flows into India with $160bn or 26% of its total, according to Indian government data. 

Earlier this year, Hindenburg Research reported that the Adani Group, which is under investigation by the Securities and Exchange Board of India, is linked to several offshore entities in Mauritius. The report alleged that Vinod Adani, brother of the group’s chairperson Gautam Adani, controlled 38 Mauritius shell entities, among others in jurisdictions such as Cyprus, the UAE, Singapore and several Caribbean Islands.

Mr Seeruttun refutes the notion that the entities set up in Mauritius by the embattled Indian conglomerate are shell companies. He insists that not a single licence has been given by the regulator to “companies which don’t have substance”. “The claims about shell companies in Mauritius are not founded,” he adds.

Mauritius has been proactive in stressing its transparency over recent years. In October 2021, intergovernmental body the Financial Action Task Force (FATF) removed Mauritius from its increased monitoring process due to the country’s “significant progress in improving its anti-money laundering/combating the financing of terrorism regime”. 

FDI equity inflows from Mauritius to India dropped from $8.2bn in 2019 to $2.3bn in 2022.

“We are one of the few countries and the only one in the African region that is combating all the 40 FATF recommendations,” Mr Seeruttun says. Mauritius’s corporate tax rate stands at 15% in line with the OECD’s proposal for a global minimum tax rate, effective as of 2024.

When asked directly if Mauritius is a tax haven, the country’s financial services and good governance minister says that Mauritius satisfies all the conditions set by the OECD and FATF and stresses that the country does not practise “any harmful tax regime”.

African focus 

In 2019, Mauritius signed the African Continental Free Trade Area agreement along with trade agreements with China and India. 

“There is the perception that Africa is a risky place to do business,” Mr Seeruttun says. “The advantage that we have is that we are part of the African Union and we have [signed] a number of tax treaties and investment promotion and protection agreements, which give an additional layer of security to investors.”

With no foreign exchange controls, a robust banking system and a bilingual workforce in English and French, Mauritius has an edge to offer international investors looking at Africa, Mr Seeruttun says. In addition, for African countries that want to trade with one another, Mauritius offers the same level of stability, thereby positioned to become “the trade finance hub for intra-African trade”. 

By 2030, the Mauritian government aims to double the size of its financial sector and increase the IFC’s contribution to its gross domestic product to $1.9bn from $1bn in 2018.