The new hub for Africa’s wealthiest sees a sharp increase in number of millionaires

In a world where billionaires have ousted multi-millionaires off rich-lists, where the rich have made way for the super-rich, and where High Net Worth Individuals (HNWI) pale in comparison to Ultra High Net Worth Individuals (UHNWI), to say that the rich are proliferating in number and in the quantum of their wealth is no overstatement.

Which begs the question: where do these ultra wealthy people park their money?

Well, as it turns out, Mauritius could be on the map as the new frontier for wealth management.

Africa, a new haven for the affluent

Previously, anytime somebody talked about the next hot spot to invest in, Mauritius was seldom (if even at all) mentioned. Instead, all talks of wealth management mainly channelled towards the West. Today, that mind-set has been revisited. We are witnessing a paradigm shift in the global financial landscape: in no time, Singapore is slated to outperform Switzerland as the world’s largest offshore wealth centre[1], partly as a result of tightened regulations in Europe. According to the latest report by Boston Consulting Group, “Global Wealth 2016: Navigating the New Client Landscape,” Singapore’s offshore assets will rise at a compound annual rate of 8% over the next four years, in contrast to Switzerland’s modest 3%. Now, the pendulum is swinging towards Africa.

The African continent has enjoyed a surge in its number of millionaires in the last decade. While the “AfrAsia Bank Africa 2017 Wealth Report” predicts a 36% rise in the number of HNWI in Africa over the next 10 years, it has also recorded a 2% drop in the number of millionaires compared to 2015. In stark contrast, tiny Mauritius – an island-nation with a population of just over 1.2 million – bucked the trend pervading the continent: that same report places Mauritius as the wealthiest country in Africa (an average wealth per capita of $25,700), with a staggering 230% growth in the number of millionaires between 2006 and 2016.

As it navigates the shifting terrain of European wealth management, Mauritius is asserting itself as a serious contender, and others are listening.

An enabling context for investors

The nation-island is poised to position itself as a service hub for the affluent in Africa

It comes to no surprise that Mauritius’ white-sand beaches and year-round good weather make it a hotspot for tourists. The idyllic setting, coupled with its low tax rates, has particularly appealed to retirees: residents not only enjoy an alluring 15% income and business tax, but they also gain automatic permanent residency if they purchase a property worth $500,000. This has turned the island into a honey pot for deep-pocketed South Africans, – who have amassed far more than the $1 million mark – 280 of whom have set up home in Mauritius since 2006. Equally impressive are the 90% literacy rate and skilled, bilingual workforce that put it in a commanding position to serve both English and French speaking countries. Historically, the island was a strategic vital stop on the Spice Trade route that criss-crossed between Europe and the East. The various waves of immigrants have led to an unusually eclectic mix of people, fostering a culture of integration and community.

Securing a footing in wealth management

A growing number of HNWI invariably rouses a demand for sophisticated financial solutions. In response to the influx of HNWI into the territory, Mauritius has diligently crafted the prerequisites to be a politically and economically stable nation. As the easiest country in Africa to do business with a low regulation that fosters a competent functioning of businesses, the island has pulled its weight as a worthy platform for banking and financial services. It has also made great strides in strengthening its regulatory framework by adhering to good governance global standards and ethical norms. It is no wonder that Mauritius is on par with nations like the United States, Singapore and Hong Kong in its compliance with global requirements.

In demonstrating a high commitment in its collaboration with the Organisation for Economic Co-Operation and Development (OECD), the island has joined the movement towards greater transparency, divesting itself of the unsettling notoriety of being a “tax haven”. Deservedly, it has made it to the OECD’s “white list”, a feat attained only by nations whose tax laws allow information-sharing. Mauritius has also signed a whopping 19 Memorandums of Understanding with different regulators in its quest for more transparency, and ratified 38 Double Taxation Agreements (DTAA) that ensure lower taxation on dividends, interest and royalties. This has spurred the inception of international banks, audit firms and law firms in Mauritius, earning it its fitting reputation as a trustworthy international financial services centre.

A positive GDP growth and a favourable Asset under Management (AuM) indicator are a good start to defining a thriving asset management sector. While Mauritius’ GDP loiters around 3.3% per year, it is predicted to soar to 4% by 2020, an impressive figure when weighed against the average global GDP growth of 3.8%. This triumph, when coupled with the fact that AuM is projected to reach MUR 18.4 billion by 2020, almost twice its actual figure, brings Mauritius one-step ahead.

The nation-island is poised to position itself as a service hub for the affluent in Africa – and across the globe – propelling the ultra-rich to look beyond tried and tested destinations like Singapore and Hong Kong.