Mauritius 2nd on the Absa Africa Financial Markets Index 2020
With the introduction of new rules and regulations, Mauritius has climbed up 4 points (79/100) in comparison with last year (75/100) on the Absa Africa Financial Markets Index 2020. With a market infrastructure and tax environment favourable to foreign investment, it is the second time in a row that Mauritius secured its place on top on the table.
The Absa Africa Financial Markets Index comprises of 23 African countries, which are assessed over six pillars: market depth; access to foreign exchange; market transparency, tax and regulatory environment; capacity of local investors; macroeconomic opportunity; and legality and enforceability of standard financial markets master agreements. The Absa Africa Financial Markets Index has become a benchmark for the investment community and Africa generally to gauge countries’ performance across a host of indicators important for financial market development.
Africa Exchange Linkages Project
With the amendments brought to its trading rules, the Stock Exchange of Mauritius (SEM) has opened up its market to international central securities depositories, including Euroclear and Clearstream. The objective is to make the Mauritian market more alluring to potential international investors by allowing them to invest in debt securities, Eurobonds and exchange-traded funds on the SEM to transfer these securities directly via the International Central Securities Depository (ICSD) to other investors. Mauritius and South Africa are the only markets in the index with such links to ICSD.
Access to foreign exchange
The position of Mauritius on top of the ranking is also explained by the country being less prone to foreign exchange fluctuations despite the high ratio to reserves and by its position as a favourable domicile for investment funds, attracting investments from all over the world.
On overall, Mauritius (and Morocco) offer the most attractive tax environments with a Double Taxation Agreements with many countries around the globe. Mauritius has no withholding tax on dividends and no capital gains tax, among other advantages.
The index also recognises the country’s quality of financial reporting. In addition, one of the people surveyed, mentioned that the regulators should now look at making financial reporting more efficient, especially the use of XBRL (the globally recognised format for digital accounts filing).
Mobilising local savings
Mauritius has the second largest pension pool relative to population. The country’s pension assets per capita stood close to USD 4,500 at the end of 2019. In addition, Mauritius launched its MauCAS payments systems, which allows new payment firms to provide services to existing bank account holders, thus creating more opportunities for Fintech firms. Mauritius also earned points for improved resolving insolvency scores.
Inspiring investor confidence through legal certainty
Many countries, including Mauritius, have refined their legal frameworks in view of attracting foreign investments. With the adoption of the three global master agreements (derivatives, repos and securities lending) fully enforceable and widely used by banks and firms, Mauritius becomes the leading African country in terms of regulatory compliance, governance and investor confidence.
Despite the current economic circumstances linked to the COVID-19 pandemic and the inclusion of Mauritius on the high-risk third countries of the EU, this index shows that Mauritius is improving and still remains the ideal platform for investing and doing business in Africa.
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