Millionaires in Africa: an attractive market for Mauritius

Thierry Vallet, Interim CEO of AfrAsia Bank: “Mauritius should retain its attractiveness quotient”

AfrAsia Bank has published the latest edition of its Africa Wealth Report, a comprehensive analysis of the continent's wealth. Thierry Vallet, Interim CEO and one of the founding directors of the Mauritius-based banking institution, sheds light on the current risks as well as the opportunities to be seized....

What is your assessment of the latest edition of the AfrAsia Bank Africa Wealth Report?

Despite the complex conditions surrounding a decrease in the total wealth pool in Africa - the economies of South Africa, Egypt and Nigeria have recorded negative growth amongst others due to the depreciation of some currencies against the dollar – our AfrAsia Bank Africa Wealth Report estimates that we will register a growth of more than 30% over the next ten years! This increase is mainly driven by billionaires and Mauritius has experienced, since 2010, with 76%, the second fastest growth in private wealth held by millionaires and multimillionaires. We have benefited from our stability, low taxes and ease of doing business. For the record, we count 4,400 millionaires! However, this situation is somewhat undermined today, especially with a higher tax rate. Nevertheless, we must maintain our attractiveness to remain competitive with other African countries such as Ethiopia, Kenya and Rwanda. Moreover, according to the report, the African continent alone will produce some 30,000 new millionaires in the coming years. We must, therefore, continue to offer our sophisticated and competitive services so that they choose Mauritius to do business as well as to live there.

What’s the strategy to attract these wealthy clients?

A crisis is an opportunity in disguise! And, the COVID-19 crisis is also hitting our competitors. Mauritius positioned itself as the preferred destination for some ultra-high net worth individuals, especially South Africans. However, the difficulties of getting to the Island and the changes in our tax policy combined prompt us to no longer be a reference for this clientele. They are going to Dubai, seduced by its world-class airline hub operating on the same time zone as Mauritius. We must at all costs preserve our stable financial environment so that these ultra-high net worth individuals can entrust us with the management of their assets without necessarily being Mauritian residents.

Thus, AfrAsia has devised a whole strategy, starting with the expansion of our teams with the recruitment of high-level staffs, whilst digitising our services and developing work from home policies. We need to increase our visibility, especially in Africa and Asia, by leveraging proactive marketing strategies to target, identify and convince this clientele.

How does AfrAsia adapt itself in this “new normal”?

During the second confinement, I was personally congratulated by customers for the quality and efficiency of our services compared to the competition. Through the procedures and tools put in place and despite having a small team on-site, we have been able to ensure the continuity of our operations without any disruption.

AfrAsia is already positioned to serve our customers remotely given that a majority of them reside outside Mauritius. Therefore, there was no major change in our activity: the transition from on-site to work from home has been almost natural. Today, there are only 40% of our staff in the office, without impacting our efficiency and productivity.

The “new normal” also enables us to be more rigorous in the way we target our customers. This was brought about by the blacklisting effects which have convinced us to reinforce our prudential controls in order to build a sustainable customer base.

Does this mean that your Due Diligence team has been strengthened?

Due Diligence (due diligence procedures) in the banking sector is subject to constant reviews. Our teams assigned to this type of operation have benefited from our strong interest to increase the acceptability criteria, allowing us to offer better suited products.

The dreaded wave of business failures seems to be starting. However, it can also be a source of destructive creation. Which sectors can pull through?

The tourism sector has been more affected than others. According to the statistics, it represents 'only' 8% of our GDP, but, in reality, it represents a whole ecosystem that accounts for between 20% and 25% of our economy and, above all, 40% of our foreign exchange earnings! But, Mauritius is a nation of entrepreneurs. We have witnessed some great conversions. The key word is to reinvent ourselves! Let's give time to see if these companies will be able to maintain themselves and why not even prosper... Entrepreneurship can create new stories.

For example, work from home has created new needs and, therefore, new services, such as home delivery, which is booming. Our country wants to attract foreigners who want to enjoy an idyllic place to work whilst still being connected to the world.

The “new normal” can also encourage Mauritians to save for their future needs, as, besides the negative growth rate, the rupee has depreciated by 20%. This will boost the competitiveness of our exporting companies.

Additionally, despite the fact that a few companies have gone bankrupt, we have to think about recovery. This requires a rapid reopening of our borders. The return of our national airline is a strategic necessity for the country. In the absence of Air Mauritius, we will need another national airline, if Air Mauritius were to disappear.

Besides digitalisation, what changes do you see in the short and medium term in the Mauritian economy?

Mauritius is still lagging behind in digital activities. We have tried to position ourselves as a cyber Island, but this vision has not materialised for two main reasons: the cost of bandwidth and access to skilled labour. If we regret the absence of innovative Mauritian entrepreneurs on the global level, we also fail to attract foreign profiles who could facilitate the driving force. They could use Mauritius as a hub, a springboard to target the African and Asian markets.

The Island is also located on the Asia-America sea route. In addition to being a regional bunkering zone, could we not imagine becoming a re-routing country for East Africa.