Sunil Benimadhu: “We need to create new products that are not tax-centric”

The Chief Executive of the Stock Exchange of Mauritius, Sunil Benimadhu has been re-elected as the Chairperson of the Global Finance Mauritius board. In an interview with News on Sunday, he highlights his priorities and elaborates on how Mauritius can become a financial hub. 

You were recently re-elected as Chairperson of the Global Finance Mauritius. What do you aim to achieve during your mandate?
We have reached an important juncture for the financial services sector in Mauritius, in view of significant challenges on the horizon. I will seek to ensure that we play a key role in the elaboration of the Blueprint for the financial services sector for the next 10 years. We look forward to reinforcing our engagement with policy makers and regulators as we strive to transform Mauritius into a leading IFC of international repute.

Mauritius vows to become a financial services hub for the region. Is this objective achievable?
Mauritius has made important strides towards becoming a vibrant International Financial Centre during the last 25 years. Its strategic location, its stable socio-political environment, its business-conducive framework, it’s well-established and yet competitive regulatory framework, and its connectivity and openness to the rest of the word makes Mauritius an attractive hub for financial services and capital raising, linking Asia/Europe/USA to Africa.

Furthermore, the fact that the OECD’s Global Forum has recently awarded Mauritius a ‘Compliant’ rating provides testimony to the fact that the Mauritius International Financial Centre complies with the norms of transparency at international level. This will render Mauritius more attractive.

However, a financial hub and an international financial centre harbours a wide range of activities, including asset management, wealth management, investment banking, international capital-raising and international corporate advisory services, amongst others, and Mauritius has not yet made any meaningful inroads in many of these areas. There is a need to reflect on how best we can progress on these fronts, how do we open up our country to foreign professional talent and foreign operators that can play an instrumental role in developing these new activities and help Mauritius move up the value chain in terms of higher value-add services offered from our jurisdiction.

What are the impediments and constraints limiting the global business sector?
We are facing a period of change, and investors are looking for long term visibility. We are currently facing changes in the light of the OECD’s BEPS agenda and new EU blacklist, potential changes to our DFTC regime, the General Anti-Avoidance Rule (GAAR) and Place of Effective Management (POEM) and uncertainty can be a cause of concern for investors. It will be up to the market players, government and regulatory authorities to articulate a clear message about what the Mauritius International Financial Centre has to offer, and to develop new sub-sectors and new products to meet future demand.

Government has committed itself to boost our financial sector. Do you feel it is walking the talk?
The Government well recognises the importance of financial services, which continued to represent a key component of the Mauritian economy in 2016, with activities contributing to 12.1% of GDP. There have been a significant number of international missions by the Financial Services Promotion Agency to build awareness of our offer, and now the Government is committed to elaborating a new Blueprint for our sector for the next 10 years, which is a welcome initiative in which the industry will play a leading role. We need to react quickly to developments to create new products and services to boost our offer, which should no longer be tax-centric.

Africa is already well advanced in areas such as mobile banking and we need to move quickly if we wish to be ahead of the curve."

Mauritius is member of various African organisations and has signed many Double Taxation Avoidance Agreements (DTAAs) and Investment Promotion and Protection Agreements (IPPAs). What can more be done to promote Mauritius as a capital raising hub for Africa?
The Stock Exchange of Mauritius (SEM) is gearing up to play a far greater role in the region as a capital raising hub. The SEM has enabled issuers, local and international, to raise a total of USD 5.3 Billion since 2009 and it is worth noting that several of these issuers are GBCs having African promoters and are cross-listed on other African Exchanges. The forthcoming listing of Afreximbank’s Depositary Receipts sets the stage for more African and international issuers to use the SEM’s platform to raise capital through the issue of DR’s.

Much more can be done to raise the profile of Mauritius as a capital-raising platform for international issuers, namely for those looking at investing in Africa and other emerging regions of the world. First, there is a need to develop a local ecosystem that is supportive of good companies having good growth prospects which choose Mauritius and SEM as their capital-raising and listing platform. Institutional investors from Mauritius should be willing to include these companies in their investment portfolios.

Second, time has come to link part of the billions of dollars that are harboured in the international funds structured in the Global Business sector to the funding needs of those local and global business companies that wish to raise capital and list on SEM. The success of these above initiatives will go a long way in transforming our financial centre and introducing a wide variety of high value-add services.

What are the mains risks affecting businesses worldwide today?
This is a period of significant change in many parts of the world, with flows of trade taking a new direction, from free trade to greater protectionism. President Trump is likely to make substantial changes to US trade and foreign policy, and Brexit will re-shape a number of relationships inside and outside of Europe, which all represent risks as well as opportunities. The international transparency agenda continues apace, and Mauritius must be alert and proactive in the face of international scrutiny. Moreover, other forms of risks, like geopolitical risks, have surfaced recently in the wake of growing political tensions between the United States and North Korea.

Are there any prospects for young Mauritian graduates and professionals in the financial sector?
Financial services is already proving to be an attractive sector for young Mauritian graduates and professionals, and one which is even attracting young people to return to Mauritius under the diaspora scheme. The Financial Services Institute has also been conducting graduate training courses to introduce our graduates to the operations and activities of the financial sector. With the Blueprint, we will hopefully have greater visibility regarding the new areas where young people should train for the future.

However, firms operating in the financial services sector are on the look for young and bright professionals who have the ability to tune in very quickly to a very competitive landscape, who are intellectually versatile and can think critically and who can make a difference to the environment in which they work. Graduate degrees are important, but they are far from constituting passports that guarantee employment, especially highly-paid employment, in the financial sector.   

So what does the future hold out for the financial services?
Financial services in Mauritius have a bright future. We are already seeing market consolidation and the entry of new players like SGG Group and SANNE, which proves that our International Financial Centre is an attractive proposition and which can bring us greater international visibility. We need to develop new products and services, bring in international expertise, reinforce our relationships with China and India, as the economic powerhouses of the future, and cement our role as the capital-raising and listing platform for African ventures.

The way that people and firms do business in the financial sector is fast changing, and we need to make sure that we keep pace with the disruptive developments in terms of distributed ledgers and block-chain and that we are fully conversant with the numerous FinTech breakthroughs. Africa is already well advanced in areas such as mobile banking and we need to move quickly if we wish to be ahead of the curve.