Off the grey list and hungry to grow fintech capabilities

Off the grey list and hungry to grow fintech capabilities

Nicolas Richard, Managing Partner of Juristconsult Chambers, discusses the rumblings of cryptocurrency investments in Mauritius and the many motives for increasing investor confidence


Investors and observers welcomed Mauritius’ exiting of the FATF Grey List in October 2021, as well as its removal from the EU ban in January. What signal do you believe these decisions will send to international investors?

Our removal from the FATF Grey List will definitely boost investor and consumer confidence in Mauritius. Except for a few cases where potential clients chose other jurisdictions to structure their investments, the impact has not really been that significant. It would have been another story if Mauritius had remained on the list for a longer period. We work a lot with DFIs that have been using Mauritius for quite a while, and they did not change their strategy of using the country as a platform to invest in other African countries. There was indeed an impact as far as bank and other financial transfers were concerned because it affected the capabilities of our banks to carry out transactions quickly. This delay would have affected foreign investors had we remained on the list for a long time.

We have shown our commitment to adhering to the standards, and the government and the private sector have worked together to achieve this in quite a short period of time. The Cayman Islands and the UAE are now on the grey list, which means that some of the clients who were going to look at those jurisdictions may instead be looking at Mauritius for their investments in Africa.


In the World Bank’s Ease of Doing Business Report 2020, Mauritius placed 1st in Africa and 13th in the world in terms of places to do business. To what laws, reforms or policies do you attribute this score, and what has the country done in recent years to improve its standing?

In addition to all the measures that have been taken over the last five years, we have recently been building a lot more on the automation of licensing permits. Most of the business licensing processes can now be done electronically with the implementation of the National Electronic Licensing System. The country has also implemented what we call the Mauritius e-Registry system making all immovable properties are now publicly available. This is a great improvement from where we were even 10 years ago.

For instance, in our practice—where we work a lot on cross-border deals—you can now incorporate a company by submitting all the required documents online. For a domestic company, it normally takes less than 12 hours if you have all the required documents. When we act for international lenders who use Mauritian companies for their African projects, you can also register fixed and floating charges online. There is a proper system that allows you to follow every step of registration. You even have the name of the person who is dealing with your charge, so that you can call them and see why it’s taking too long, if that’s the case. Whereas before it might take several weeks to get an update and even then they would tell you there was missing information, now we can follow it almost entirely online and in real-time.


What should be done to further solidify Mauritius’ competitive positioning as a great place to do business?

There is still room for improvement, and we must make even more use of technology. Sometimes when you look at the laws and regulations, the steps are not clear enough. There should be consistent guidelines and timelines, for instance, when dealing with an amendment or an erasure of fixed and floating charges for cross-border transactions.


As the economic fallout of the COVID-19 pandemic wanes, analysts are expecting a surge in both public investments and FDI as the economy returns to normal. In which sectors are you expecting to see a rebound and what do you expect will be the primary areas of opportunity?

For Mauritius, obviously the traditional sectors must be supported. It is a priority for the government that the tourism sector returns to 2019 levels because of the impact it has on employment and its capability to attract foreign currency to Mauritius. In addition to the tourism sector, the government is looking to develop new sectors such as healthcare. There are already some incentives that have been put in place to attract the production of vaccines and other drugs in Mauritius.

I can see from our practice that there is a growing interest in terms of renewable energy because of all the issues relating to climate change. We are seen to be a safe and stable country where you can set up a factory without much risk. Given the size of the country itself, we are not competing on volumes, but on a targeted niche market in the area of healthcare, for instance.

Concerning immigration, the government has put forward the premium visa and the 10-year family occupation permit, which was introduced in the last budget for those contributing a minimum of $250,000 to the COVID-19 Projects Development Fund. There have been other measures as well, to attract foreigners and retired foreigners to the country.

Mauritius is also adapting itself to the evolving business world and we have recently enacted the Virtual Asset and Initial Token Offering Services Act which deals with fintech and everything related to cryptocurrency. In the last two years, we have had quite a lot of interest from investors in Asia and Europe regarding this, but the regulators were a bit cautious about cryptocurrencies. Now they have come forward with this act, and this is an area in which we will see some growth. As of yet, there is no taxation in Mauritius on cryptocurrency.


What FDI opportunities currently exist in Mauritius and what services can your firm provide to guide investors through this process?

We do provide services in the fintech area. In fact, when the government three or four years ago maybe a bit prematurely announced that we were a fintech island, we had a lot of interest from investors from countries like South Korea—something we don’t normally. In one week, we had three inquiries from potential clients, but the issue was that most of them could not open bank accounts locally because the Bank of Mauritius had issued a statement saying that banks in Mauritius should not engage with clients dealing in cryptocurrency. That caused a bit of a setback for us in that area, but now—with the new law—we should see a boost.

We are one of the only law firms to be part of the Mauritius African Fintech Hub and we have been organizing several talks with other players in the industry to advise clients in that area. We have already advised a few clients in terms of regulatory issues regarding their projects. Next month, we are co-sponsoring a CryptoVerse Summit, and we are organizing a fintech webinar in collaboration with DLA Piper in May.

Furthermore, the Financial Services Commission has issued guidelines for what we call peer-to-peer lending and crowdfunding, which is also an emerging source of funding without the need to resort to traditional banks. I would say that we will be seeing quite a few developments in that area. Again in the financial services area, the government has just released the Variable Capital Company Bill, which will further boost the setting up of investment funds in Mauritius, Africa and countries beyond.


Are there any other major incentives or advantageswhether in terms of setting up a business, of immigration, or of taxationthat the country is offering international investors? What other major laws and regulations should an investor know about before investing in the country?

We have a very favorable taxation regime. The effective tax rate is 15 percent, but you can benefit from an 80 percent exemption on income, such as foreign dividend, subject to the amount not allowed as deductible in the source country and interest income. The government also set up a few very interesting schemes to attract investors in areas such as healthcare, and has set up the regional headquarters scheme. Additionally, now that one can nearly work from anywhere provided you have a decent internet connection, people can live in Mauritius and still work for their foreign company be it in the UK, France or elsewhere. Various schemes have been put in place to attract those international workers who have very specific experience and can add value to Mauritius.


Mauritius boasts a considerable number of high-caliber, internationally recognized law firms. What would you say are your firm’s competitive advantages or unique offerings, and how do you stay ahead of the competition?

First, we are part of the DLA Piper Africa network which has built a very strong and comprehensive presence throughout the continent. This allows us to accompany our clients through our network of lawyers in their development in Africa, be that in Kenya, Uganda or even Ivory Coast and Nigeria. We work for several local conglomerates and, given the size of the Mauritian market, they are already present in various countries in Africa. Having such a long-standing relationship with these clients—over 15 to 20 years—they trust us and want us to be their point of contact in their expansion. We are one of the only firms to have its own Indian Ocean network, hence our excellent relationships with law firms in Seychelles, Reunion Island, Madagascar and even some in Comoros.

In terms of our strategy, we try to be the best at what we do. We have chosen to focus on specific areas and develop our expertise in certain fields: namely business and commercial law with a focus on corporate banking and finance, investment funds, mergers and acquisitions, fintech, data protection and employment law. We train our lawyers as much as our newest recruits to be experts in these areas, in order to differentiate ourselves in the market. We firmly believe in technology and try to deliver our services in the most efficient and cost-effective ways.

Before 2009 there were no law firms in Mauritius. Law firms here are a quite recent arrival and I would say that, even now, 70 percent of the lawyers in Mauritius are still working as private practitioners. It makes a big difference when you are dealing with cross-border investments and big companies if you can offer a high quality of service. In our firm, you have at least two lawyers on every case which means you will never be left hanging.


What do you most hope to achieve in the medium to long term and what is your primary focus in order to expand the firm’s reach and clientele?

Obviously, there is quite a bit of competition right now in Mauritius from other international law firms and even from other entities such as the big four accounting firms who are competitors to DLA and the Magic Circle Firms in Europe and London. In Mauritius, the same phenomenon is starting. We have a PwC Legal in Mauritius but, as I have said, we want to focus on those areas we are good at and deliver top-quality service.

After having developed our expertise in funds and data protection, we will pursue further developments in areas such as fintech. We have seen a lot of interest and that is why we are organizing conferences and webinars on the topic. Following the placing of Mauritius on the grey list, there were more and more requests from clients to ensure that they were complying with AML CFT requirements. We have recruited some specialists in those areas as we anticipate growth in that space.


Do you have any final comments for readers?

Given Mauritius’ geographical position, time zone, expertise and experience, we have been a financial hub for more than 20 years, handling massive amounts of financial transactions. Although at the start it was mainly with India, the change in the double taxation agreement has caused a shift, and I would say that now 95 percent of the deals I work on are targeting Africa.

The issues with Ukraine right now have shone light on the capabilities of African countries to further develop agriculture, and we will see increased investment from Europe and the U.S. in agri-projects and agribusiness on the continent. Mauritius itself, given its success story in the sugarcane industry, can even export its expertise to Africa.

Given our membership in the African Union, SADC and COMESA, Mauritius is extremely well-positioned to be the destination of choice for investment in the African continent, which is the continent poised for colossal growth in the future.